Partnership Agreements Drafting

Question 1

Structure

Answer 1

1) Heading
2) Parties
3) Definitions
4) Commencement and duration
5) Name and place of business
6) Partnership property
7) Banking
8) Accounting records
9) Capital
10) Income
11) Drawings
12) Authority
13) Meetings and voting
14) Incoming partners
15) Continuance of partnership
14) Retirement
15) Expulsion
16) Option to purchase share
17) Restrictive covenants
18) Dissolution
19) Execution

Question 2

Name and place of business

Answer 2

1. The Partnership shall carry on the Business from the Premises under the Name.
2. If the Partners decide to change the Name, the Partnership shall immediately inform all relevant authorities and professional bodies and all of its clients and suppliers.

Question 3

Partnership Property

Answer 3

In absence of a contrary agreement the partners will be entitled to equal shares of the partnership property.

Question 4

Partnership Property - Wording for when they will own unequal shares

Answer 4

1. Partnership Property shall belong to the Partners in the proportions in which they are entitled to share in capital

Question 5

Partnership Property - Holding on trust

Answer 5

Any Partnership Property that is vested in one or more of the individual Partners’ names shall be held by them on trust for all of the Partners. All costs and expenses relating to such Partnership Property shall be borne by
the Partnership and the other Partners shall indemnify the Partner or Partners in whom such property is vested against all liabilities that may arise directly or indirectly in respect of it

Question 6

Banking - Where a certain amount of money can’t be withdrawn without two or more partners

Answer 6

No cheque shall be drawn on, or instruction issued for, the electronic transfer of moneys from any Partnership account for a sum in excess of [£50,000] unless it is signed by any two or more Partners

Question 7

Capital

Answer 7

Need different subclauses relating to the following:
1) Initial capital and how much each partner will contribute
2) If they are to be paid interest and at what rate
3) How they will own partnership capital
4) How they will share capital profits
5) How they will increase the capital

Question 8

Capital - Initial capital

Answer 8

The Partnership capital shall initially be [£2,000,000] contributed by the Partners as follows:
[Tom Hanks £800,000] ect.

Question 9

Capital - How they will share capital profits

Answer 9

The Partners shall own the Partnership capital in the same proportions as their capital contributions

Question 10

Capital - How they will increase the capital

Answer 10

f the Partners decide to increase the Partnership capital, that increase shall be contributed in the proportions in which the Partners own the Partnership capital
immediately before the increase.

Question 11

Capital - Profits and losses

Answer 11

Capital profits and losses shall be shared between and borne by the Partners in the proportions in which they own the Partnership capital.

Question 12

Capital - Interest

Answer 12

Each Partner’s share of the Partnership capital shall bear simple interest at two per cent per annum above the base rate of the Bank from day to day credited annually to the respective Partners before the division of Net Profit

Question 13

Authority

Answer 13

1. Each Partner is authorised in the usual course of the Business to buy, order, and contract for any goods, property and services but only up to a value of [£50,000] per transaction (or such other amount as a majority of the Partners shall decide).
2. If any Partner acts in breach of clause [10.1], they shall indemnify the other Partners from and against any claims, costs and demands arising from the breach

Question 14

Meetings and voting - Partnership Act 1890 (This regards decisions which need unanimous decisions)

Answer 14

The following matters shall require the unanimous consent of the Partners at a duly convened meeting:
1) Change of nature of the business
2) The introduction into the partnership of a new partner
3) Any change to the terms of this Agreement

Question 15

Restrictive Covenants

Answer 15

1. An Outgoing Partner shall not, within two years of leaving the Partnership, engage either directly or indirectly in any business competing with the Business
   within a radius of [15 miles] from the Premises.
2. An Outgoing Partner shall not, within four years of leaving the Partnership, solicit business from anyone who has been a client of the Partnership within two years before the Outgoing Partner left the Partnership