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British Law >> Organisation Area >> Partnership Agreement

Partnership Agreement

A partnership is a way of establishing a business relationship between several parties who agree to work together and to share in profit and also in liability. It can be covered by a standard agreement, you can have one specially drafted, or a standard form can be adapted.

A solid partnership agreement can make all aspects clear to all parties.

There are two types of partnership known as 'Partnership' and 'Limited Liability Partnership'.

In a standard partnership the individual partners are benefited if the business makes a profit and are liable if it makes a loss. Their personal possessions are therefore at risk (homes, money etc.).

In a Limited Liability Partnerhsip (LLP) the liability is limited, and so is safer for the partners who are not personally liable for losses unless they are shown to be trading recklessly. The LLP requires registration at Companies House and has a more strict administration to meet Companies House rules including regular publishing of accounts (annual).

Standard forms can be used to establish either kind of partnership, or a special agreement can be drawn up by a solicitor.