This document is a clause which can be inserted into a partnership agreement.
In some partnerships, all of the partners will be involved in the day to day management of the company. However, this is not the only model of management for partnerships. For example:
- one of the partners may have the capital needed to fund the business and another partner has the expertise to run the business but not the capital needed to invest in the business; or
- in family partnerships, one member of the family may have the expertise to run the business while other members of the family have a financial share in the business but have no interest in being involved in the business.
In these circumstances it is common for one partner with expertise to have sole management responsibilities for the business.
It is worthwhile to consider what would happen to the partnership if the managing partner were to resign, retire or die. The question of succession planning is personal to each partnership. Therefore this needs to be discussed between the parties and a customised clause drafted dealing with what has been decided regarding succession planning.
Using this precedent
This clause can be used as a replacement to the management provisions of the separate precedent “Partnership agreement (short form, general)”, or can be inserted into any partnership agreement.
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 LexisNexis 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.