A neutral-form two-party general partnership agreement to be established under the Partnership Act 1890 of England & Wales, providing a basic framework for capital, profit-sharing, management and exit.
How to use this template, read this first - Replace every
[SQUARE-BRACKET]field before use. - A general partnership arises whenever two or more people carry on a business in common with a view to profit. If you do not make an agreement, the default rules of the Partnership Act 1890 apply, and those defaults are often unwelcome (for example, profits and losses are shared equally regardless of capital put in, and the partnership can be dissolved by a single partner's notice, or automatically on a partner's death or bankruptcy). This agreement lets you set your own terms instead. - A general partnership does not give limited liability, partners are jointly liable for the firm's debts. Consider whether an LLP or limited company suits you better. - Have a solicitor (and an accountant) review before use.
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THIS PARTNERSHIP AGREEMENT is made on [DATE]
BETWEEN (1) [PARTNER A NAME] of [ADDRESS]; and (2) [PARTNER B NAME] of [ADDRESS] (each a "Partner" and together the "Partners").
Agreed terms
1. Formation and name. The Partners carry on business in partnership under the name "[FIRM NAME]" (the "Partnership").
2. Business. The business of the Partnership is [DESCRIBE].
3. Commencement and duration. The Partnership begins on [DATE] and continues until ended in accordance with this Agreement.
4. Place of business. The Partnership's principal place of business is [ADDRESS].
5. Capital. Each Partner contributes capital as follows: [PARTNER A: £AMOUNT; PARTNER B: £AMOUNT]. Capital accounts will be maintained for each Partner.
6. Profits and losses. Profits and losses are shared [as set out here, e.g. equally / in proportion to capital / A: __% , B: __%]. (Specify, otherwise the Act's equal-sharing default applies.)
7. Drawings. Each Partner may draw £[AMOUNT] per [month] on account of profits, to be adjusted against their share.
8. Banking and accounts. The Partnership will maintain a bank account requiring [signatures]. Proper books of account will be kept, and annual accounts prepared and agreed by the Partners.
9. Management and decisions. Each Partner may take part in management. Ordinary decisions are taken by [majority / agreement]; the following major decisions require the unanimous consent of all Partners: [e.g. borrowing above £[AMOUNT], taking on a new partner, changing the nature of the business, disposing of major assets].
10. Duties. Each Partner will act in good faith towards the others, devote [full/agreed] time to the business, and account to the Partnership for any private profit from partnership activity.
11. Admission of a new partner. A new partner may be admitted only with the unanimous consent of the existing Partners.
12. Retirement and expulsion. A Partner may retire on [NUMBER] months' written notice. [Set out any grounds for expulsion and the procedure.]
13. Death or incapacity / continuity. [Note: this is a two-party partnership. If one partner dies or becomes bankrupt, the existing partnership ends because a partnership requires at least two persons; one person cannot "continue" a partnership alone. The agreement can instead provide a buy-out mechanism and allow the surviving person to carry on the business personally or form a new partnership with an incoming partner.] In the event of the [death / bankruptcy / retirement] of a Partner, the remaining Partner may purchase the outgoing or deceased Partner's share at a value determined as set out in clause 14, and may admit a new Partner to continue the business. [Note: "permanent incapacity" is not an automatic statutory dissolution event under the Partnership Act 1890, take advice on the appropriate trigger and mechanism.]
14. Valuation and payment of an outgoing share. An outgoing Partner's share is valued [by the Partnership's accountants / per agreed formula] and paid [in [NUMBER] instalments / within [NUMBER] months].
15. Restrictions. For [NUMBER] months after leaving, a former Partner will not [solicit clients / compete] within [AREA], so far as reasonable to protect the Partnership.
16. Dissolution. On a winding-up, losses (including any capital deficiencies) are met first out of profits, then out of capital, and lastly by the Partners in the profit-sharing ratio. Assets are then applied in the following order: (a) paying third-party debts; (b) repaying any partner advances/loans (distinct from capital); (c) returning capital contributions; and (d) dividing any surplus in the profit-sharing ratio (Partnership Act 1890, default rules, subject to the agreement). [Specify any different agreed order here.]
17. Dispute resolution. Disputes will be referred to [mediation / arbitration] before court proceedings.
18. Governing law and jurisdiction. This Agreement is governed by the law of England and Wales, whose courts have jurisdiction.
Signatures
Signed by [PARTNER A]: __________________ Date: [DATE] Signed by [PARTNER B]: __________________ Date: [DATE]
--- This template is a starting point and not legal advice. A general partnership carries unlimited personal liability, and the Partnership Act 1890 defaults apply to anything you leave out, have a qualified solicitor and accountant review and adapt it before use. Governing law: England & Wales.