Australian Partnership Solicitors - Commercial Law

If you would like legal advice from an Australian partnership solicitor about creating a business partnership, or advice in relation to disputes, we offer specialist business and commercial lawyers with expertise in this complex area of law. Our partnership solicitors are experienced in establishing new enterprises including: business partnerships; joint ventures and strategic alliances; preparing and reviewing commercial agreements. They can also provide advice on how to best resolve disputes which can arise over the distribution of profits and losses; decision making authority; personal versus partnership assets; differences in opinion as to the future direction of the firm; the terms of dissolution or disengagement.

Our partnership solicitors give a free initial consultation over the phone with no further obligation. They are experienced in providing advice to a range of partners including professional partners (law firms, medical practices, accountants, architects and surveyors), creative partners, and small family businesses. Complete the contact form or phone us today for further information on how our partnership solicitors may be of assistance to you.

SOLICITORS HELPLINE 1800 455 886

Australian Partnership Law

Partnership is essentially used to carry on privately owned businesses in the private sector. Each Australian State has a statute with similar provisions covering :-

• The nature of partnership
• Relationship between partners
• Relationship of partners to persons dealing with them
• Dissolution of partnership
• Limitation of liability of limited partners
• Nature, formation and registration of limited partnership and incorporated limited partnership

The legislation generally defines a partnership as “the relation which exists between persons carrying on a business in common with a view of profit and includes an incorporated limited partnership.” It does not include the relation between members of any company or association which is incorporated. Persons who have entered into a partnership are collectively known as a “firm” and the name under which their business is carried on is called the “firm name”.

A partnership agreement can be verbal, in writing or may be implied by the conduct of the partners. There is no legal requirement for partners in a business to draw up an agreement, but it is advisable to have written agreement if the partners intend to operate the business over an extended period. Legislation defines a number of specific rules to which regard shall be had in determining whether a partnership exists. While the statutory definition is given particular force, case law has focused on certain features of relationships as or particular significance in determining whether there is a partnership or not. Features of relevance include the intention of the parties (express and inferred intention); the sharing of net profits and losses; contribution of capital.

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Characteristics of a Partnership

A general partnership is not recognized by Australian law as a distinct legal entity. The general principle is that each partner has unlimited liability to the creditors of the partnership. The legislation states that every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while the partner is a partner; and (if the partner is an individual) after the partner’s death the partner’s estate is also severally liable in a due course of administration for such debts and obligations so far as they remain unsatisfied, but subject to the prior payment of the partner’s separate debts. The unlimited liability of partners may be contrasted with the limited liability available to shareholders of companies.

Partners are bound by acts on behalf of the firm and every partner is an agent of the firm and of the other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which the partner is a member, binds the firm and the other partners. The exception is where the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom the partner is dealing either knows that the partner has no authority, or does not know or believe the partner to be a partner.

No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the partners. Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of the partner’s intention so to do to all the other partners. Where the partnership has originally been constituted by deed, a notice signed by the partner giving it, shall be sufficient for this purpose.

Subject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner. A partnership is in every case dissolved by the happening of any event which makes it unlawful for the business of the firm to be carried on, or for the members of the firm to carry it on in partnership.

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Limited Partnership

A limited partnership or incorporated limited partnership must have at least one general partner, and at least one limited partner. A corporation and a partnership (including an external partnership) may be a general partner or a limited partner in a limited partnership or incorporated limited partnership. A limited partnership or incorporated limited partnership may have any number of limited partners.

A general partner has managerial control and authority to act on behalf of the business. A general partner also has the personal liability issues mentioned above. However a limited partner cannot take part in the management of the business, and generally has no authority to act on behalf of the business (although some of these things can be modified to an extent with a partnership agreement). A limited partnership needs to be separately registered with your State’s Fair Trading Office/Consumer Affairs department.

SOLICITORS HELPLINE 1800 455 886

Incorporated Partnership

An incorporated limited partnership (ILP) can be thought of as a more complex version of a limited partnership. An ILP is a body corporate with legal personality separate from that of the partners in it and with perpetual succession, and may have a common seal, and may sue and be sued in its firm-name. ILPs appear to be the preferred entities to use when applying for registration of a limited partnership for venture capital purposes under Commonwealth legislation.

The legislation requires that there be a written partnership agreement between the partners in an incorporated limited partnership. The interests of the partners in an incorporated limited partnership and their rights and duties in relation to the partnership are, subject to the legislation, to be determined in accordance with the agreement.

SOLICITORS HELPLINE 1800 455 886

Legal Advice

If you are considering entering a business partnership, you should seek advice from a business and partnership solicitor. Do not rely on internet sites offering seemingly cheap pro forma partnership agreements. These agreements are usually so general that they cannot possibly cover all the specific circumstances of your situation. A business lawyer has the expertise to advise you on which kind of partnership is most suited to your situation- general partnership, incorporated partnership and limited partnerships – you need to be sure that you set up the appropriate vehicle for your needs. A partnership solicitor can also ensure that any commercial agreement complies with legislation.

Our business lawyers also provide advice and representation in partnership disputes. If you cannot resolve disputes relating to profit/loss sharing, ownership of assets, management issues, breaches of the agreement, partner responsibilities and business entry/exit issues, then you should seek the assistance of a lawyer with expertise in business and commercial law. Please telephone us for an initial free consultation or complete our contact form for further advice and assistance. This is an obligation-free service.