Free Partnership Agreement Template

FORMATION AND FIRM NAME

The Partners have agreed to carry on business in partnership under the firm name Hargreaves and Sharma Consulting (the "Firm"), with its principal place of business at Suite 3, York Business Centre, Tower Street, York, YO1 9WD. The Partnership shall commence on 2026-04-01 and shall continue until dissolved in accordance with this Agreement or by operation of law.

The Partners acknowledge that the Firm is a general partnership formed under the Partnership Act 1890 and not a limited partnership under the Limited Partnerships Act 1907 nor a limited liability partnership under the Limited Liability Partnerships Act 2000.

BUSINESS OF THE PARTNERSHIP

The business of the Partnership is: Management consulting, strategic advisory and change management services to UK public sector and NHS organisations.

The Firm shall not, without the written consent of all Partners, engage in any business or activity materially different in nature from the foregoing (s.24(8) PA 1890). Each Partner shall act in the utmost good faith towards the other Partner and the Firm in accordance with the fiduciary duties at common law and s.28-30 PA 1890 (duty to render accounts, account for benefits, account for profits of competing business).

CAPITAL CONTRIBUTIONS

Each Partner shall contribute capital to the Partnership as follows:

Partner A (Thomas Hargreaves): £30,000.00
Partner B (Priya Sharma): £30,000.00

Capital contributions shall be paid in full on or before the commencement date. A separate capital account shall be maintained for each Partner, recording their contributions, drawings and share of undistributed profits.

Interest: No interest shall be payable on capital contributions (s.24(4) PA 1890), save on amounts advanced in excess of agreed capital which shall bear interest at 5% per annum (s.24(3) PA 1890).

PROFITS, LOSSES AND ACCOUNTS

Profits and losses shall be shared equally between the Partners (50%:50%), notwithstanding any disparity in capital contribution or effort (the default rule under s.24(1) PA 1890).

Accounting date: The accounting reference date of the Firm shall be 31 March. Annual accounts shall be prepared in accordance with UK GAAP and agreed and signed by all Partners within 90 days of each Accounting Date.

Tax: The Partnership is transparent for tax purposes under Part 9 of the Income Tax (Trading and Other Income) Act 2005. Each Partner is individually responsible for income tax, Class 2 and Class 4 National Insurance contributions and VAT (if applicable) on their share of Partnership profits. The Partners shall appoint a nominated partner to submit the Partnership tax return (SA800) and deal with HMRC correspondence.

MANAGEMENT, AUTHORITY AND RESERVED MATTERS

All material Partnership decisions shall require the unanimous written agreement of all Partners (overriding the simple-majority default in s.24(8) PA 1890 for ordinary matters).

Reserved Matters: The following decisions shall in all cases require the unanimous written consent of all Partners: (i) admission of a new partner (s.24(7) PA 1890); (ii) variation of this Agreement; (iii) change in the nature of the business (s.24(8) PA 1890); (iv) any borrowing or giving of security by the Firm above £10,000; (v) dissolution; (vi) acquisition or disposal of capital assets above £10,000; (vii) commencement or settlement of litigation; (viii) expulsion of a Partner.

Actual and ostensible authority (ss.5-9 PA 1890): Every Partner is an agent of the Firm and his co-partners for the purpose of the business of the Partnership. A Partner has no authority to bind the Firm in any matter outside the ordinary course of business without the consent of the other Partner(s), following Mann v D'Arcy [1968] 1 WLR 893. Each Partner shall notify third parties of any restrictions on authority where reasonably practicable.

BANKING AND FINANCIAL CONTROLS

Any one Partner may authorise transactions on Partnership bank accounts up to £5,000.00 per transaction. Transactions above this threshold require the joint authorisation of both Partners.

The Partnership shall maintain one or more dedicated business bank accounts with an authorised UK bank. All income of the Firm shall be paid into, and all expenses paid from, such accounts. Proper books of account shall be kept at the Firm's principal place of business and shall be available for inspection by any Partner (s.24(9) PA 1890).

WORKING COMMITMENT, SALARY AND DRAWINGS

Each Partner shall devote substantially the whole of their working time, energy and skill to the business of the Firm and shall not, without the prior written consent of the other Partner, engage in any other trade, business or paid occupation (consistent with the duty of good faith in s.29-30 PA 1890).

Salary: Each Partner shall be entitled to draw a salary of £48,000.00 per annum, payable monthly in arrears, to be debited to their current account and treated as an advance against their profit share. Salary shall only be paid to the extent the Firm has available funds.

Holiday entitlement: Each Partner shall be entitled to 28 working days' paid holiday per annum, to be taken at times agreed with the other Partner. Unused holiday shall not be carried forward unless agreed.

RETIREMENT, DEATH, INCAPACITY AND EXPULSION

Voluntary retirement: A Partner may retire from the Firm by giving six (6) months' prior written notice to the other Partner(s). The retiring Partner's capital and current account balances shall be paid out within 180 days of the effective retirement date (or on the basis of an earnings multiple / independent valuation where applicable under clause 9), after settlement of all outstanding Firm liabilities.

Death or incapacity — buyout: On the death or permanent incapacity of a Partner, the surviving Partner(s) shall have the right (but not the obligation), exercisable by written notice within 90 days, to purchase the outgoing Partner's share at fair market value determined in accordance with clause 9.

Insolvency: Notwithstanding s.33(2) PA 1890, the bankruptcy, insolvency, Individual Voluntary Arrangement, or charging order over partnership property of a Partner shall not automatically dissolve the Firm. The remaining Partner(s) may elect to continue the business and purchase the insolvent Partner's share in accordance with clause 9.

Expulsion (s.25 PA 1890): A Partner may be expelled by written notice from the other Partner(s) if that Partner: (i) is in material breach of this Agreement and fails to remedy within 30 days of notice; (ii) commits any act of dishonesty, fraud, gross misconduct or serious criminal offence; (iii) is declared bankrupt; (iv) becomes prohibited from acting as a partner under any law; or (v) becomes permanently incapacitated. Section 25 PA 1890 precludes expulsion by majority unless this power is expressly conferred — the parties accordingly confer it.

VALUATION OF PARTNERSHIP SHARE AND GOODWILL

The value of an outgoing Partner's share shall be calculated as the sum of: (a) the outgoing Partner's capital and undrawn current account balance as at the effective date; plus (b) an amount equal to their profit-share percentage of goodwill, valued at a multiple of the average net profit of the Firm over the preceding three (3) accounting years (or such shorter period as applies). The multiple shall be as agreed or, failing agreement, determined by an independent valuer.

DISSOLUTION AND WINDING UP

The Firm shall be dissolved on the earliest of: (a) expiry of any fixed term (s.32(a) PA 1890); (b) completion of a particular adventure (s.32(b)); (c) notice of dissolution given by any Partner in a partnership at will (s.32(c)); (d) mutual agreement of all Partners; (e) death, bankruptcy or permanent incapacity of a Partner where clause 8 so provides; (f) illegality of the business (s.34 PA 1890); or (g) court order under s.35 PA 1890 (including for permanent incapacity, prejudicial conduct, persistent breach or just and equitable grounds).

Winding up (s.38-44 PA 1890): On dissolution, the assets of the Firm shall be applied first in discharge of its liabilities to non-partner creditors, then to each Partner rateably for advances, then to repay capital, and any surplus divided in the profit-sharing ratio. Any loss or deficiency shall be borne in the profit-sharing ratio. The Partners shall have a continuing duty to cooperate in good faith to conclude outstanding matters, collect debts and realise assets (Hurst v Bryk [2002] 1 AC 185).

RESTRICTIVE COVENANTS

(a) Non-compete: For a period of twelve (12) months from the date a Partner ceases to be a Partner, that Partner shall not, directly or indirectly (whether as principal, employee, consultant, shareholder, officer or otherwise), carry on or be engaged in any business which competes with the business of the Firm as carried on at the date of departure within 25 miles of the Firm's principal place of business.

(b) Non-solicitation: For a period of twelve (12) months from the date a Partner ceases to be a Partner, that Partner shall not, directly or indirectly, (i) solicit, entice or accept business from any client or customer of the Firm with whom they had material contact in the preceding 12 months; (ii) solicit, entice or procure the resignation of any employee of the Firm; or (iii) interfere with the Firm's relationship with any supplier.

The Partners acknowledge that these restrictions are reasonable and necessary to protect the legitimate business interests of the Firm (including goodwill, trade connections and confidential information) and are enforceable under the Nordenfelt v Maxim Nordenfelt [1894] AC 535 principles. Each restriction is separate and severable.

ADMISSION OF NEW PARTNERS

No new Partner may be introduced to the Firm without the unanimous written consent of all existing Partners (as required by s.24(7) PA 1890). Any new Partner shall execute a deed of adherence in a form reasonably required by the existing Partners, agreeing to be bound by the terms of this Agreement.

CONFIDENTIALITY, DATA PROTECTION AND ANTI-BRIBERY

Confidentiality: Each Partner shall keep confidential (both during and for five (5) years after ceasing to be a Partner) all confidential information of the Firm, including client data, financial information, business strategies, know-how and trade secrets, and shall not use the same except for the benefit of the Firm. This duty is in addition to the equitable duty of good faith and the duty under s.28 PA 1890.

Data protection: The Firm shall act as data controller in respect of personal data processed in the conduct of its business, and shall comply with the UK GDPR and the Data Protection Act 2018. Each Partner warrants that they have in place appropriate technical and organisational measures for the secure handling of personal data and will comply with all ICO registration requirements and any data subject rights requests.

Anti-bribery: Each Partner warrants that they will comply with the Bribery Act 2010 in connection with the Firm's business, and will not offer or receive any bribe, kickback or improper inducement.

DISPUTE RESOLUTION

Any dispute or difference arising out of or in connection with this Agreement or the conduct of the Firm's business shall first be referred to mediation in accordance with the CEDR Model Mediation Procedure. If mediation fails to resolve the dispute within 60 days of commencement, any party may commence proceedings in the courts of England and Wales.

JOINT LIABILITY AND GENERAL PROVISIONS

Joint and several liability (ss.9-12 PA 1890): The Partners acknowledge that each Partner is jointly (and in certain cases severally) liable with the other for the debts and obligations of the Firm incurred while they are Partners. This Agreement regulates the position between the Partners only and does not limit any Partner's exposure to third-party creditors.

Indemnity: Each Partner shall indemnify the other against any liability, loss or expense arising from that Partner's wilful misconduct, fraud or gross negligence, or from any breach of this Agreement.

Notices: Any notice shall be in writing and delivered to the Partner's address first stated above (or such other address as notified) by hand, first-class post or email, with delivery deemed to occur two Business Days after posting or on the day of email (if before 5pm on a Business Day).

Entire agreement; variation: This Agreement constitutes the entire agreement between the Partners relating to the Firm and supersedes all prior arrangements. No variation shall be effective unless in writing and signed by all Partners.

Severability; third-party rights: If any provision is invalid or unenforceable, the remainder shall continue in force. A person who is not a party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement.

Equality and non-discrimination: The Partners shall conduct the Firm's business in compliance with the Equality Act 2010 in all dealings with employees, clients and third parties.

Governing law: This Agreement and any dispute arising out of it (including non-contractual disputes) shall be governed by and construed in accordance with the law of England and Wales.