Partnership Agreement Template (UK)

Joint liability for debts, joint and several liability for wrongs — the two aren't the same

Under the Partnership Act 1890, each partner is liable jointly with the other partners for debts and contractual obligations the firm incurs while they are a partner — meaning a creditor pursuing the firm's contract debts is, in strict legal theory, pursuing all the partners together, not any one of them alone for the whole amount in isolation. Liability for a partner's wrongful act or omission in the ordinary course of the firm's business is different: under the Partnership Act 1890, that liability is joint and several, so a person harmed by a partner's negligence or breach of duty can sue any one partner for the whole loss. In Scotland, partners are already severally liable for the firm's debts by default, because a Scottish partnership has separate legal personality from its partners — a distinction worth knowing if any partner or the firm's business is based there. This template states the position for partnerships governed by the law of England and Wales plainly, rather than leaving partners to discover it only when a creditor or claimant comes looking.

A 50/50 split needs a deadlock clause, or the partnership has no tie-breaker

When two partners each hold half the vote, any decision requiring both partners' consent can simply stall if they disagree — there's no third vote to break the tie, and the Partnership Act 1890's own default rules don't supply one either. A 50/50 agreement without a deadlock mechanism is, in practice, betting that the partners will never seriously disagree about anything requiring joint approval. This template's equal-split option includes a deadlock ladder: a set period to meet and resolve the disagreement directly, then mediation, then a buy-sell option at a fair value fixed by an independent valuer acting as an expert (not an arbitrator) if mediation doesn't work — so there's an actual path forward instead of an indefinite stall.

In a majority-minority split, the minority partner needs protection, not just a smaller number

Giving one partner day-to-day control (common and often sensible in a 70/30 or similar split) shouldn't mean the minority partner has no rights beyond a defined profit share. This template's majority-minority option adds an information right (access to the partnership's books and records on reasonable notice), a requirement that the majority partner disclose and get consent for transactions where they have a personal interest, and a right of first refusal if the majority partner wants to sell their interest to a third party — protection a 70/30 agreement needs and a generic template usually doesn't have at all.

The clauses, explained

Ownership split

Equal 50/50, majority-minority, or a custom percentage — selected above the document, driving the management and protection clauses that follow.

Liability of Partners

States the Partnership Act 1890 position plainly: joint liability for the firm's debts and contracts, joint and several liability for a partner's wrongful acts — the distinction most partnership templates leave unsaid entirely.

Management

In an equal split, both partners have equal management authority. In a majority-minority split, the majority partner has day-to-day control, subject to the minority partner's protections below.

Deadlock (equal split)

A defined path when the partners can't agree on a matter requiring joint consent: a direct-meeting period, then mediation, then a buy-sell option — rather than an indefinite stall.

Minority Partner Protections (majority-minority split)

Information rights, a consent requirement for the majority partner's self-dealing, and a right of first refusal if the majority partner wants to sell — protection a minority partner actually needs.

Indemnity

Each partner indemnifies the partnership and the other partner against losses caused by their own negligence, breach, or misconduct — on top of, not instead of, the firm's own duty under the Partnership Act 1890 to indemnify a partner for payments properly made in the ordinary conduct of its business.

Restrictive Covenant (Non-Competition)

A restriction with a defined duration and a stated geographic and activity scope — under the common-law restraint of trade doctrine, an unlimited restriction protects nothing and a court is far less likely to enforce it.

Requirements checklist

The Partnership Act 1890 supplies default rules for every general partnership, whether or not the partners ever write anything down — this agreement exists to replace those defaults with terms the partners actually chose.

• Partners are liable jointly for the firm's debts, jointly and severally for wrongful acts

  Section 9 of the Partnership Act 1890 makes each partner liable jointly with the other partners for debts and obligations the firm incurs while they are a partner. Section 12, read with section 10, makes that liability joint and several for loss caused by a partner's wrongful act or omission in the ordinary course of the firm's business. Partners in Scotland are severally liable for the firm's debts by default, because a Scottish partnership has separate legal personality.

  Partnership Act 1890, section 9

• Profits and losses default to equal shares unless the partners agree otherwise

  Section 24 of the Partnership Act 1890 entitles all partners to share equally in the capital and profits of the business and requires them to contribute equally to losses, regardless of how much capital each contributed — unless the partners have agreed a different split, which is exactly what this agreement's ownership-split selector records.

  Partnership Act 1890, section 24

How to use this template

1. Choose the ownership split. Select equal 50/50, majority-minority, or custom — this determines whether the deadlock clause or the minority-protection clauses appear.
2. Fill in the partners and the partnership. Type each partner's name and address, the partnership's name, and its business purpose into the highlighted blanks.
3. Set contributions and the consent threshold. Fill in each partner's capital contribution and the amount above which incurring debt requires both partners' written consent.
4. Complete the deadlock or minority-protection fields. For an equal split, fill in the meeting and mediation periods. For a majority-minority split, confirm the information-rights and right-of-first-refusal terms.
5. Set the restrictive covenant scope. Fill in a specific duration, geographic area, and type of competing activity — an open-ended restriction is less likely to be enforced under the restraint of trade doctrine.
6. Sign and download. Both partners sign, then download the agreement as a Word or PDF file.

Frequently asked questions