Partnership Agreement Sample for a Small Business Uk

When setting up a small business in the UK, it is crucial to have a partnership agreement in place. This document outlines the terms and conditions of the partnership and helps prevent disputes and misunderstandings between partners. In this article, we will provide a sample partnership agreement for a small business in the UK and discuss some key considerations to keep in mind.

Sample Partnership Agreement for a Small Business in the UK

Partnership Name: [Insert Partnership Name]

Partners:

[Insert Partner 1 Name] [Insert Partner 1 Address]

[Insert Partner 2 Name] [Insert Partner 2 Address]

Purpose of Partnership:

The partners hereby agree to carry on the business of [Insert Business Description] under the name of [Insert Partnership Name].

Term of Partnership:

The partnership shall commence on [Insert Start Date] and shall continue until terminated by mutual agreement of the partners.

Capital Contributions:

The partners shall contribute the following amounts to the partnership:

[Insert Partner 1 Name] – [Insert Contribution Amount]

[Insert Partner 2 Name] – [Insert Contribution Amount]

Profits and Losses:

The profits and losses of the partnership shall be shared equally between the partners.

Management:

The partners shall have equal rights in the management of the partnership business. Decisions shall be made by mutual agreement of the partners.

Withdrawal of a Partner:

A partner may withdraw from the partnership at any time by giving written notice to the other partner(s). The partnership shall be dissolved upon the withdrawal of a partner.

Death or Incapacity of a Partner:

In the event of the death or incapacity of a partner, the partnership shall be dissolved. The remaining partner(s) shall be entitled to wind up the affairs of the partnership.

Dispute Resolution:

Any disputes arising between the partners shall be resolved through mediation or arbitration.

Governing Law:

This partnership agreement shall be governed by the laws of England and Wales.

Key Considerations for your Partnership Agreement

When drafting your partnership agreement, there are several key considerations to keep in mind:

1. Business Purpose: Be specific about the purpose of your partnership. This will help avoid any confusion about what the partnership is designed to achieve.

2. Capital Contributions: Clearly outline the amount of capital each partner will contribute to the partnership. This will ensure that all partners are aware of their financial obligations.

3. Profit Sharing: Decide on a fair and reasonable way to divide profits and losses between partners.

4. Management: Establish a system for decision-making and management that is fair and effective.

5. Withdrawal of a Partner: Plan for the possibility that one or more partners may need to withdraw from the partnership at some point.

6. Death or Incapacity of a Partner: Prepare for the possibility that one partner may pass away or become incapacitated.

7. Dispute Resolution: Include a process for resolving disputes between partners.

Conclusion

A partnership agreement is a crucial component of any small business in the UK. By outlining the terms and conditions of the partnership, it helps prevent disputes and misunderstandings between partners. Use the above sample agreement as a template for your own partnership agreement and keep in mind the key considerations discussed in this article. With a clear and fair partnership agreement in place, your small business can thrive and succeed.