Do you have a Partnership Agreement?

It is not necessary to have a formal partnership agreement for your business structure to be recognised as a partnership. In general, if there is no written agreement, partners are deemed to hold equal shares and thus have equal responsibility for the operation of the business, as well as its profits and debts.

The provisions of the Partnership Act apply only if there is no provision to deal with that particular matter in a separate partnership agreement. The partnership agreement will always override the rules set down in the Act. It is advisable, therefore, to enter into a partnership agreement so that things are clear for everyone involved.

Even though the law does not require it, it is a good idea to have a partnership agreement set out formally in writing. There is something about having it written down in black and white. It means that everyone involved knows his/her obligations and responsibilities and there is less room or argument later on.

The running of a partnership depends on mutual trust and confidence between the partners and the law reflects this expectation.

The problem arises when the relationship between the various partners breaks dow...

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