CLAUSES TO BE CONSIDERED IN A PARTNERSHIP AGREEMENT .

The following clauses should be considered and included in a partnership agreement

when entering into a partnership. It is best for Jason to amend and negotiate the clause
as there are different provisions of the 1890 PA which apply in the absence of any
agreed partnership agreement. The clauses which should be considered when entering
into a partnership are:

1. CAPITAL CONTRIBUTIONS CLAUSE

Default provision of the PA1890 is that S.24(1) all partners are entitled to share
equally in the capital unless otherwise agreed. Therefore unless Jason agrees with
JPM FOODS on an explicit contribution clause he would have to contribute equally
towards the capital alongside the pther partners.
The agreement between the partners should state what investment each partner is to
make towards the business.

2. PROFIT SHARE

If there is no clause in regards to the share of the profit between the partners then
S.24(1) provides that all partners are to share equally in the profits of the business.
According to the accounts it is apparent that the shares are currently being shared
equally between the partners.
Jason should consider the profit he is making as a sole trader and compare that to the
contribution towards the partners, if he is making more profit in his business as a sole
trader then depending on his capital contributions to the proposed partnership he
should consider whether he wants to agree to the provisions which provide an
increased salary

3. PARTNERSHIP PROPERTY

Jason should consider including a clause regarding which property is to be regarded

as partnership property and which is individual property. In the absence of such an
agreement S.20(1) provides that ‘all property originally brought into the partnership
stock…. For the purpose of the partnership business is called partnership property’
Jason may well want to use his property towards the capital contributions towards the
partnership but any such decision should be agreed in a partnership agreement

4. LEASHOLD PROPERTY

The leasehold property is in Jason’s name. He will be liable for the property. If he
wants the lease to be a partnership property then he must obtain consent from his
landlord and have this included in the partnership agreement.

5. POWER TO DISTRIBUTE SHARES

6. POWER TO PURCHASE SHARES
7. COMPETITION CLAUSE UPON LEAVING THE BUSINESS
8. RETIREMENT CLAUSE

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  S5PA provides that every partner is an agent of the firm and the act of any
partner carried out in the usuall way of business binds the firm Unless the
partner had no authority

 Peter herring is a partner of JPM health foods and generally, according to s.5
has the power to bind the firm. If however, he has purchased the bmw by
using the firms money without the authority then he is personally liable for the
bmw.

 It will also have to be known whether the dealer who peter bought the bmw
from knew that peter had the authority or believe him to be a partner of the
firm

 Jason hirst will not be liable to the purchase of the bmw as he offered
protection by sec17PA which states that a new partner to the firm does not
become liable to the creditors of the firm for anything done before he became
a partner.

 In the absence of any agreement between the partners s.25PA1890 provides

that no majority of partners can expel any partner. If Janet and Mohammed
want to remove peter form the partnership then they shall ask him to leave or
alternatively decide to dissolve the partnership by giving notice under s32 to
all the partners. Once the existing partnership Is dissolved they should
consider entering into a new partnership agreement Jason, Janet and
Mohammed.

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