• Careers
  • Contact Us

Cautionary Notes on Partnership Deeds

on Monday, 20 March 2017.

We know that many practices have a Partnership Deed “floating around” the surgery somewhere, although some are out of date and no longer fit for purpose.

What is often not understood is that when a new partner joins a partnership, this results in the formation of a new partnership. It is irrelevant whether the new partner is on probation or not. Consequently, if the new partner and the existing partners have not put appropriate arrangements in place, any previous Partnership Deed will not continue to govern this new partnership.

Where there is no new arrangement the partnership will be governed by the Partnership Act 1980, which will render the partners vulnerable as the provisions in the Act can have unintended results. One of which is that under the Act partners share both the profits and the losses equally, regardless of their individual contributions to the practice. A partnership which is not governed by a Deed is a ‘Partnership at Will’. This means that there is a technical dissolution of the partnership as soon as a new partner joins or a partner retires, dies or is expelled. Such dissolution can cause a forced sale of the partnership assets, including the practice premises, redundancy of practice staff and automatic termination of various contractual arrangements.

The best way forward is either to have a new Deed or to have any existing Deed revised to incorporate updates to deal with changes in the law and the NHS and to incorporate arrangements dealing with the admission of the new partner.

We would be very happy to advise your practice and to provide you with a tailored Partnership Deed.

For more information, please contact Ros Parkin in our Partnership team on 0207 665 0948.

Leave a comment

You are commenting as guest.