Deed of partnership

A deed of partnership is a legally binding agreement between the partners that are setting up in business together. It describes how the partnership will be run and the rights and duties of the partners themselves.

It's not necessary to have a deed of partnership in order to set up a partnership, but it's a good idea, as it will help to avoid misunderstandings and disputes between partners in the future. If the partnership does not have a deed, it will be governed by the terms of the Partnership Act 1890 which does not offer solutions to many of the problems that can arise and may not suit the way that you and your partners want to work together.

As well as giving basic information about the partnership, such as its business name and the names of the partners, the deed will usually set out:

• The amount of capital that each partner is to contribute to the business.
• The way in which partners will share profits, and whether any of the partners should be paid a salary.
• Working arrangements, such as how much time each partner should contribute to the business.
• Changes to the partnership, such as how new partners can be appointed and what happens if a partner dies or wishes to leave the partnership.