Legal Articles

Partnership agreement v partnership at will

Home / Knowledge base / Partnership agreement v partnership at will

Posted by Kelly-Anne Carr on 29 August 2017

Partnership at will

A partnership at will is a form of business partnership where there is no fixed term agreed for the duration of the partnership. In other words, it is completely open ended. This differs from a usual business partnership by way of agreement as this type comes to an end at any time when a partner serves a notice to dissolve the partnership on the other partner or partners providing the partnership agreement provides for this.

A partnership will be deemed to be a partnership at will unless contrary evidence can be shown. To show contrary intention there must be an express (in writing) or an implied (by conduct) agreement which shows that the partnership is not a partnership at will. It can be difficult to reflect by conduct alone that the business is not a partnership at will and therefore it is advisable that any business partnership agreement is contained in a written document which can be referred to.

The Partnership Act 1890

A partnership at will is governed and subject to the terms of the Partnership Act 1890 (“the Act”). This Act, given the date, is often considered to be ‘out of date’ for modern businesses and does not take into consideration the intricacies of today’s business world. For example, under the Act when a partner dies, the partnership automatically comes to an end and similarly there is no provision for a partner to retire without bringing the partnership to an end. In this day and age your business can be as flexible as you want it to be, providing that you have drafted an agreement which contain the terms for reference.

In addition, the Act dictates that the business’ profits and losses in both income and capital are divided equally between the partners. Therefore as a result of the Act, all partners are liable for any debts incurred by the business in addition to an equal sharing of the profits which in some partnerships might not be intended. For example, partnerships can now be more diverse where each partner may have different responsibilities and workloads which may be reflected in the remuneration that they receive. The Act unfortunately does not allow such flexibility.

Partnership Agreement

By having a formal agreement in place such as a partnership deed or agreement you are preventing any unexpected adverse consequences of your partnership being solely governed by the Act which can be considered to be rigid. It allows you, together with the other partners, to decide how the partnership will come to an end, how profits and liabilities are dealt with and how retirement is dealt with amongst other key matters. A partnership agreement can therefore act as a type of insurance policy which guides the partners through every eventuality in business. For more information please see 'Don’t write your will without your partnership agreement to hand'

About the author

Kelly specialises in all aspects of contentious probate work and disputed estates.

Kelly-Anne Carr

Kelly specialises in all aspects of contentious probate work and disputed estates.

Recent articles

12 August 2020 Wright Hassall wins housing association contracts

Leading Midlands law firm Wright Hassall has signed two major deals to supply legal services to the housing association sector which is on an expansion drive to meet rising demand.

Read article
12 August 2020 Wright Hassall helps Helping Hands to move office

A much-loved Leamington charity, The Helping Hands Community Project, has moved into two-storey 4,600 square ft premises on Althorpe Street on a new lease with assistance from leading Midlands law firm, Wright Hassall.

Read article
12 August 2020 Wright Hassall shortlisted for 'Regional Solicitor Firm of the Year'

Wright Hassall’s Private Client Team is one of three law firms shortlisted for the ‘Regional Solicitor Firm of the Year’ (Midlands) at The British Wills and Probate Awards.

Read article
How can we help?
01926 732512