Partnership agreement document - need some opinions/advice

Trevstonbury_2

Good morning,
My business partners and I are in the process of drafting up a business agreement (attached) for our new business venture. Due to the nature of the relationship between 2 of the directors, it has been agreed that one director will have a greater vote on the financial decisions and any other decisions that require a vote. Would someone be able to run their eyes over the attached draft agreement? I would like to ensure it's water-tight enough with regards to voting, but also that we haven't missed anything else important out.
Any thoughts of advice are much appreciated!

Kind regards

Trevor

tacpot12

The partnership agreement seems somewhat confusing in the early sections in that it mentions a company. It would be better to do a global replace of "Company" with "Partnership" throughout the document.

Section 2 can only define the trading name of the partnership (not the firm name). The partnership does not have legal name that you can define; the partners' names together define the legal name of the partnership. With this advice in mind, the last two words of Section 2 seem superfluous. You can include a sentence to say that a change in the trading name can be agreed by voting. 

 Ideally Section 3 should state the purpose of the partnership in enough detail that if one partner wants to change the nature of the business, this change can be seen as a change and thus allow the other partners to withdraw under the terms of the agreement. You can include a sentence to say that a change can be agreed by voting. 

The first sentence in Section 26 creates an impossible situation as the new partner cannot be bound by this agreement until they are a party to it. It might be better to say that the Partnership will effect a new partnership agreement to admit the new partner.  

My observation is that six months is a long time to  bind someone into an association they no longer want to be bound to. Do you really think it will take this long to achieve the orderly exit of someone who wants to leave? You might need to hire a member of staff to undertake the partner's work, but this will be preferable to having them in the business when they don't want to present. 

Regarding section 37, the firm name changes automatically when one or more partners withdraws, and the rights to use the partnership name only ever vest in the partnership, so there is no chance that the partnership cannot use its own legal name. It would be better to take out the reference to the firm name and leave the reference to the trading name as set in Section 2. 
I'm not sure what a model name is, unless it relates to the names of models of products, in which case it would better to refer to "brand and product model names developed and used by the partnership" rather than "of the partnership" as this is wooly.

Due to Section 49, the last sentence of Section 13 is superfluous, and should be replaced with a reference to Section 49. (All references to voting should refer to Section 49.) 

Section 49 seems to create the potential, if not the likelihood, of deadlock during any vote if the partners were ever to fall out. Is this your intention? 

Section 71 seems superfluous.

Savvy_Sue

Trevstonbury_2 said:

Any thoughts of advice are much appreciated!

Notwithstanding tacpot's helpful post, I hope this is a professionally drawn up agreement (rather than something you have found somewhere and edited for your own purposes) AND that you have or intend to get PAID FOR legal advice as individuals, since what is in one party's best interests may not be in the best interests of every other party. 

oldbikebloke

I agree with savy- sue - there is a time to be money saving and there is a time to make sure it is right. 

I note all you have done is download from here and attempt to fill in the empty spaces 
https://www.lawdepot.co.uk/contracts/partnership-agreement/

asking strangers on the internet to then tell you if you have done it correctly, and what the implications of such a free legal document will be, is a mistake. Pay a solicitor to advise, after all this is the single most important thing about the business and will dictate what happens on everything from now on 

there is no casting vote so the "control" is ambiguous given all votes on finances and management decisions can be deadlocked - if D2 & D3 are a "couple" I can see why D1 wants it that way otherwise D1 can be "ganged up against" 2:1, but there is no method of resolution all contentious votes are 1:1/2:1/2 so blocked if D2&3 are anticipated to act together 

dancing_star

Partnerships don't have directors, they have partners, and they are businesses/partnerships, not companies. Please seek professional advice.

Blackbeard_of_Perranporth

Why ask on a public back room inn the Bridge for professional advice?

Do you trust your ex friend?
If no, walk?

Trevstonbury_2

Hi Guys,
I just want to say thank you for all the advice, I will recommend we get proper professional help drawing this up, big thanks to tacpot12 for all the detailed feedback!