How to Use This Checklist
Click each checkbox to mark items as complete. Your progress is automatically saved to your browser. Use this checklist to:
✅ Three Ways to Use This Tool
1. Audit existing agreements: Review your current partnership agreement against all 64 compliance points
2. Draft new agreements: Ensure you don't miss any essential legal requirements
3. Compare with solicitor drafts: Verify your lawyer has covered everything
⚠️ Understanding Importance Levels
🔴 Critical: Must have - omission creates serious legal risk
🟡 Important: Should have - recommended for proper protection
🔵 Recommended: Best practice - enhances clarity and enforceability
1. Basic Partnership Terms (7 items)
Partnership Name and Trading Name
Clear identification of partnership name and any trading names. Must be included in all business documents under Business Names Act 1985.
🔴 Critical
Full Details of All Partners
Legal names, addresses, and contact details of every partner. Essential for legal enforceability and notices.
🔴 Critical
Clear Partnership Commencement Date
Date when partnership begins. Critical for calculating profit shares, term duration, and limitation periods.
🔴 Critical
Partnership Duration (Fixed-Term or Indefinite)
Whether partnership is for specific period or continues indefinitely. Affects termination rights and dissolution procedures.
🔴 Critical
Principal Place of Business
Registered address where partnership conducts business. Required for legal notices and regulatory compliance.
🔴 Critical
Nature of Partnership Business
Clear description of business activities. Defines scope of partnership and limits on partner authority to bind partnership.
🔴 Critical
Partnership Objectives and Purpose
Stated goals and objectives of the partnership. Helps resolve disputes about partnership direction and legitimate activities.
🟡 Important
2. Capital Contributions (5 items)
Each Partner's Initial Capital Contribution
Specific amounts contributed by each partner at start. Creates legal record of ownership stakes and prevents disputes about who contributed what.
🔴 Critical
Form of Capital Contributions
Whether contributions are cash, assets, property, goodwill, or services. Non-cash contributions must be properly valued.
🔴 Critical
Timeline for Capital Contributions
When contributions must be made (immediately, in installments, by specific dates). Enforceable payment schedule.
🔴 Critical
Additional Capital Requirements
Process for requiring additional contributions if needed. Protects partnership from underfunding and clarifies partner obligations.
🟡 Important
Interest on Capital (If Applicable)
Whether partners receive interest on capital contributed and at what rate. Default Partnership Act 1890 provides no interest unless agreed.
🔵 Recommended
3. Profit and Loss Sharing (5 items)
⚠️ Critical Warning
Without a written agreement, Partnership Act 1890 defaults to EQUAL profit sharing regardless of capital contribution. This often causes major disputes. Your agreement must clearly specify profit/loss allocation.
Profit Sharing Ratio or Percentage
Specific percentage or ratio for each partner (e.g., 50/50, 60/40, or based on capital contributions). Must total 100%.
🔴 Critical
Loss Sharing Allocation
Whether losses are shared same as profits or differently. Default law says same as profits, but can be varied.
🔴 Critical
Distribution Timing and Method
When profits are distributed (annually, quarterly, on demand) and payment method. Prevents disputes about timing of distributions.
🟡 Important
Partner Drawings/Salary Arrangements
Whether partners receive regular drawings or salaries before profit distribution. If salaries paid, specify amounts and timing.
🟡 Important
Reserve Fund Requirements
Whether partnership must maintain reserves before distributing profits. Protects partnership financial stability.
🔵 Recommended
⚡
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4. Management and Decision-Making (7 items)
General Management Authority
Whether all partners participate equally in management or if some have more authority. Default law is equal management rights.
🔴 Critical
Ordinary Decision-Making Threshold
How routine business decisions are made (unanimous, majority vote, managing partner authority). Prevents gridlock on day-to-day matters.
🔴 Critical
Major Decision Requirements
List of decisions requiring unanimous or supermajority consent (e.g., borrowing, property purchase, admitting partners). Protects minority partners.
🔴 Critical
Partner Roles and Responsibilities
Specific duties and areas of responsibility for each partner. Clarifies who does what and prevents confusion.
🟡 Important
Spending Limits and Financial Authority
Maximum amounts individual partners can commit without approval. Prevents unauthorized large expenditures.
🟡 Important
Meeting Requirements and Procedures
How often partners meet, notice requirements, quorum rules, and voting procedures. Ensures proper governance.
🔵 Recommended
Record-Keeping and Access Rights
What records must be kept and all partners' right to inspect books. Partnership Act 1890 gives partners absolute right to inspect accounts.
🟡 Important
5. Banking and Financial Management (4 items)
Partnership Bank Account Details
Designated partnership bank account(s) and financial institution. All partnership funds must be kept separate from personal accounts.
🔴 Critical
Cheque Signing and Payment Authorization
Who can sign cheques and authorize payments (single partner, two partners required, etc.). Critical fraud prevention.
🔴 Critical
Accounting Standards and Financial Year
Accounting methods to be used and partnership financial year-end. Essential for tax compliance and profit calculations.
🔴 Critical
Accountant Appointment and Audit Requirements
Whether partnership accounts must be audited and by whom. Provides transparency and catches errors/fraud.
🔵 Recommended
⚡
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6. Partner Duties and Restrictions (6 items)
Duty of Good Faith and Fiduciary Duties
Partners must act in partnership's best interests, not secretly profit, and disclose conflicts. These are default duties under Partnership Act but should be explicit.
🔴 Critical
Time Commitment Requirements
Whether partners must devote full-time or specified time to partnership business. Prevents partners not pulling their weight.
🟡 Important
Restrictions on Competing Business
Whether partners prohibited from competing businesses during partnership. Partnership Act 1890 allows competition unless restricted.
🟡 Important
Personal Guarantees and Indemnification
Whether partners provide personal guarantees for partnership debts and indemnify each other for authorized actions. Critical for liability protection.
🔴 Critical
Expense Reimbursement Policy
What expenses partnership will reimburse and approval requirements. Partnership Act 1890 provides default reimbursement but better to clarify.
🟡 Important
Holiday and Leave Entitlements
Whether partners entitled to time off and how much. Partners aren't employees so have no statutory rights unless agreed.
🔵 Recommended
7. Partnership Property and Assets (4 items)
Definition of Partnership Property
Clear identification of what assets belong to partnership vs. partners personally. Prevents disputes over ownership.
🔴 Critical
Treatment of Partnership Property on Dissolution
How partnership assets will be valued and distributed when partnership ends. Critical to prevent dissolution disputes.
🔴 Critical
Use of Partnership Property by Individual Partners
Rules about partners using partnership assets for personal purposes. Partnership property must be used only for partnership business.
🟡 Important
Intellectual Property Ownership
Who owns IP created during partnership and what happens to it on departure/dissolution. Critical for professional partnerships.
🔴 Critical
8. Admission of New Partners (4 items)
Consent Requirements for New Partners
Whether unanimous or majority vote needed to admit new partner. Default law requires unanimous consent.
🔴 Critical
Capital Contribution Requirements for New Partners
What new partner must contribute to join and how it's calculated. Ensures new partner contributes fairly.
🔴 Critical
Deed of Adherence Requirement
New partner must execute deed agreeing to be bound by partnership agreement. Makes agreement enforceable against new partner.
🔴 Critical
Adjustment of Profit Sharing Ratios
How profit shares will be recalculated when new partner admitted. Prevents unfair dilution of existing partners.
🟡 Important
9. Partner Withdrawal and Retirement (5 items)
Notice Period Required to Withdraw
How much advance notice partner must give to voluntarily leave (typically 3-6 months). Allows partnership to prepare for transition.
🔴 Critical
Retirement Age and Mandatory Retirement
Whether partners must retire at certain age and procedure. Must comply with age discrimination law if mandatory retirement used.
🟡 Important
Valuation Method for Departing Partner's Share
How to calculate value of departing partner's interest (book value, fair value, formula, independent valuation). Critical to prevent disputes.
🔴 Critical
Payment Terms for Buyout
When and how departing partner will be paid (lump sum, installments over X years). Prevents cash flow problems and disputes.
🔴 Critical
Interest on Unpaid Buyout Amounts
Interest rate on deferred buyout payments (typically 3% above Bank of England base rate). Compensates departing partner for delayed payment.
🟡 Important
10. Expulsion of Partners (4 items)
⚠️ Expulsion Rights Warning
Partnership Act 1890 provides NO expulsion right. You can only expel a partner if your agreement explicitly allows it and specifies the grounds. Without this, you're stuck with problematic partners.
Voting Threshold to Expel Partner
Percentage of partners required to vote for expulsion (typically majority or supermajority, excluding partner being expelled). Must be clearly specified.
🔴 Critical
Specific Grounds for Expulsion
Detailed list of circumstances allowing expulsion (bankruptcy, criminal conviction, breach of duties, incapacity). Vague grounds are unenforceable.
🔴 Critical
Notice Period and Right to Respond
Partner to be expelled must receive advance notice (typically 28 days minimum) and opportunity to respond. Required for procedural fairness.
🔴 Critical
Payment Terms for Expelled Partner
Whether expelled partner receives same buyout terms as voluntary withdrawal or different (sometimes discounted for fault). Must be clearly stated.
🟡 Important
11. Death and Incapacity (4 items)
Effect of Partner's Death on Partnership
Whether partnership automatically dissolves on death or continues with remaining partners. Default law is dissolution; must specify if continuing.
🔴 Critical
Payment to Deceased Partner's Estate
How deceased partner's share is valued and paid to estate, and timeline for payment. Protects deceased partner's family.
🔴 Critical
Permanent Incapacity Provisions
What happens if partner becomes permanently incapacitated (mental or physical). Without this, incapacitated partner remains partner indefinitely.
🔴 Critical
Medical Evidence Requirements
How incapacity is determined (typically two independent medical practitioners). Prevents abuse of incapacity provisions.
🟡 Important
⚡
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12. Non-Compete and Confidentiality (4 items)
Post-Departure Non-Compete Terms
Whether departing partner restricted from competing and for how long (max 6-12 months reasonable). Must specify geography and scope. Overly broad clauses are unenforceable.
🟡 Important
Client Non-Solicitation Provisions
Departing partner cannot solicit partnership clients for specified period (6-12 months typical). Must be reasonable to be enforceable.
🟡 Important
Confidentiality Obligations
Partners must keep partnership information confidential during and after partnership. Should survive termination indefinitely for trade secrets.
🔴 Critical
Definition of Confidential Information
Clear definition of what information is confidential (client lists, financial data, methods, trade secrets). Vague definitions are unenforceable.
🟡 Important
13. Dispute Resolution (4 items)
Dispute Resolution Method
Whether disputes resolved by mediation, arbitration, or court. Mediation/arbitration is typically faster and cheaper than litigation.
🔴 Critical
Arbitration Rules and Institution
If arbitration, specify which rules apply (LCIA, ICC, CEDR). Provides clear arbitration procedure and prevents disputes about process.
🟡 Important
Arbitrator Appointment Process
How arbitrator selected (agreement of parties, institutional appointment). Prevents deadlock if parties can't agree on arbitrator.
🟡 Important
Costs of Dispute Resolution
How mediation/arbitration costs allocated (each pays own, loser pays, arbitrator decides). Provides certainty about costs exposure.
🔵 Recommended
14. Dissolution and Winding Up (3 items)
Voting Threshold to Dissolve Partnership
What vote required to voluntarily dissolve (majority, supermajority, unanimous). Without agreement, any partner can force dissolution.
🔴 Critical
Automatic Dissolution Events
Events causing automatic dissolution (bankruptcy of partner, illegality, impossibility to continue). Partnership Act 1890 provides default rules but better to specify.
🟡 Important
Asset Distribution on Dissolution
How assets distributed after paying debts (by capital contribution, profit sharing ratio, or other formula). Partnership Act provides default but often unfair.
🔴 Critical
15. General Legal Provisions (8 items)
Amendment Procedure
How agreement can be changed (typically written consent of all partners). Prevents informal variations that cause disputes.
🔴 Critical
Notices Provisions
How formal notices must be given (written, to which addresses, delivery/post/email). Critical for termination and expulsion notices.
🔴 Critical
Governing Law
Which UK jurisdiction's laws apply (England & Wales, Scotland, Northern Ireland). Critical as partnership law varies between jurisdictions.
🔴 Critical
Jurisdiction Clause
Which courts have jurisdiction over disputes (subject to arbitration clause). Typically English/Welsh/Scottish/NI courts have exclusive jurisdiction.
🔴 Critical
Severability Clause
If one provision invalid, rest of agreement survives. Prevents entire agreement failing if single clause problematic.
🟡 Important
Entire Agreement Clause
This agreement supersedes all prior discussions and agreements. Prevents partners claiming "but you said..." based on pre-agreement talks.
🟡 Important
Counterparts Provision
Agreement can be signed in multiple copies (counterparts) which together form one agreement. Useful when partners in different locations.
🔵 Recommended
Proper Execution and Signatures
Signature blocks for all partners with names and dates. Agreement not binding until properly executed by all parties.
🔴 Critical
⚡
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Next Steps
Now that you've reviewed the compliance checklist, you have three options:
✅ Use Our Ready-Made Template (Recommended)
Save days of legal research and drafting. Our professionally-crafted partnership agreement covers all 64 compliance points with legally-sound wording tested in real partnerships. Available in both Interview Mode (guided questions) and Editor Mode (direct editing) for just £10.
📝 Draft Your Own Agreement
Use this checklist as your guide, but remember: partnership law is complex and Partnership Act 1890 has dangerous default provisions. A single missing clause (like expulsion rights) can trap you in a partnership with problem partners forever. Getting the legal wording correct requires expertise.
⚖️ Book a Legal Consultation
For complex multi-partner situations, LLPs, or high-value partnerships, consider booking a consultation with our legal professionals for personalized advice tailored to your specific circumstances.