24th August 2021

Partnerships in business

There are a few options when it comes to how you structure a business, one of these is the Partnership. Most partnerships are governed by the Partnership act 1890 which establishes not only the structure of a partnership and the rights of partners but also the liabilities of a partner.

Types of partnership

It is possible for a partnership and the relations between the partners that make up the partnership  to be governed by a partnership agreement, this is a contract between the partners which can specify things such as the amount of hours each partner should dedicate to the business, what to do when someone dies or falls ill etc.

If no agreement exists then the partnership act 1890 will apply to the relationship between the partners. In some cases, it is possible that the rules regarding a partnership can be applied even though it was not specifically intended that a business relationship will be a partnership. This is considered a Partnership at Will.

Partnerships can be identified by some key features such as ownership and distribution of profits being on an equal basis amongst the partners and also the partners are liable for all of the debts of the partnership (this is not limited to the amount they have invested/put into the business) jointly and severally, meaning a creditor could seek to recover the debt from one specific partner or multiple partners.


As with all business relationships, disputes may develop between the partners in the partnership. This can stem from all sorts of issues to name a few:

  1. Use of partnership assets;
  2. Distribution of profits; and
  3. Amount of effort/hours put into the business.

In these situations, you may need to refer to your partnership agreement and/or obtain legal advice.