Continuing our series “7 Reasons Why You Don’t Need a Partnership Agreement”, our in-house company law expert Spencer Laymond, has turned this subject on its head, to set out and defend seven reasons why you don’t need a partnership agreement.
If you missed the previous reasons they can be found below:
Reason 6 - Even if a partner's conduct is akin to gross misconduct, they are disqualified from their profession, they have committed murder, it is reasonable not to have a right to expel them
If the principle of the partnership is "partners until death do us part", so no matter what behaviour or scenario affecting another partner, once in the partnership they have guaranteed membership for life, then you don’t need a partnership agreement.
Check the law yourself
Under the Partnership Act 1890, section 25 provides that no majority of the partners can expel any partner unless power to do so has been conferred by express agreement between the partners.
If on the other hand you may be concerned with not having an effective remedy if a partner stops performing, breaches an agreement; suffers prolonged mental or physical ill health, becomes insolvent, gets disqualified, ceases to hold relevant qualifications, neglects to perform his or her duties, being found guilty of a serious criminal activity or otherwise bringing the partnership into disrepute, then a partnership agreement will be required.
Next week – the Final Reason – Reason 7 – Why You Don’t Need a Partnership Agreement
Don’t forget to tune into next week’s final Reason, Reason 7 - It is reasonable for one partner to take full responsibility for paying the debts and liabilities of a bankrupt partner.