This document is a notice provided when a new partner is admitted to a partnership.
Partnership law in Australia provides that, subject to the terms of the specific partnership agreement, an old partnership is dissolved and a new partnership is created whenever a partner joins or leaves a partnership. It is therefore important for the partnership to give notice when a new partner is to be admitted into a partnership.
It is prudent to check the legislation in the applicable state or territory, to ensure legislative compliance when introducing a new partner. For example, in NSW, the consent of all existing partners is required to introduce a new partner. However, each state and territory has its own Partnership Act and the terms of the partnership agreement will also govern the requirements of, and criteria for, the admission. For example, see section 24 of the Partnership Act 1892 (NSW).
If the relevant partnership agreement includes a mechanism or process by which new partners are nominated and admitted, practitioners may wish to include a reference in the notice to the relevant clause. In the separate precedent “Partnership agreement – general (extended)”, clause 14.1 deals with the nomination of new partners.
Debts of a partnerships
Unless there is agreement otherwise, a person who is admitted as a partner into an existing firm does not become liable to the creditors of the firm for anything done before he or she became a partner.
It is not uncommon, however, (depending on the agreement between the partners) to add a statement to the following effect (if it applies): “All debts due to and owing by [firm name] will be received and paid respectively by [new partner name], who will continue to carry on the business in partnership under the name, style or firm of [name of firm].”
This document has been authored for Lexis Nexis by Michael Heraghty, Partner, TressCox Lawyers, Rosemarie Ryan, Barrister and Jacqui L Walker, Principal Lawyer, J L Walker Law.
This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.