Debts due to old firm will take precedence over debts to present partnership (optional clause)

Debts due to old firm will take precedence over debts to present partnership (optional clause)

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This document is a clause which can be inserted into a partnership agreement.

Where partnerships are dissolved but the business of the partnership is taken over by another partnership (Purchasing Partnership), including the debts of the original partnership, it is important to work out how the debts of the original partnership will be accounted for in the books of the Purchasing Partnership.

Using this precedent

This is a general clause which can be inserted into a partnership agreement. This clause can also be inserted as a new clause into the banking and authorisations provisions in the separate precedent “Partnership agreement (short form, general)”.    

When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.

This document has been authored for Lexis Nexis by Michael Heraghty, Partner, TressCox Lawyers, Rosemarie Ryan, Barrister and Elise Margow, Principal, Legally Speaking.

This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.