Business & commercial
Partnership agreements in Victoria.
A partnership can be created by nothing more than two people working together and sharing profits, with joint and several liability attached. CMK Legal drafts partnership agreements for professional practices, family businesses and investment ventures across Victoria, so the terms are yours rather than the default rules in the Partnership Act.
Solicitor-drafted
Agreements drafted for your firm and its actual economics, not a template.
Practical timeframes
First draft usually within a week of a settled term sheet.
Fixed fee, quoted first
Fixed fee for drafting and one negotiation round, agreed up front.
Australian commercial law
Partnership Act 1958 (Vic) and Victorian professional practice.
What a partnership agreement does.
Without a written agreement, a Victorian partnership is governed by the Partnership Act 1958. Those default rules are blunt: profits and losses are shared equally regardless of contribution, every partner can bind the firm, no partner is entitled to a salary, and any partner can dissolve the whole partnership at will simply by giving notice. For most businesses, at least one of those outcomes is unacceptable.
A properly drafted agreement replaces the defaults with what the partners actually intended, capital contributions and capital accounts, profit-sharing ratios and drawings, who can sign contracts and up to what value, decisions requiring unanimous consent, admission of new partners, and what happens on retirement, death, incapacity or default.
It also handles the parts people avoid discussing: how the partnership interest is valued, whether there is a compulsory buy-out and over what period it is paid, post-exit restraints, client and referral ownership, insurance requirements, and how a deadlock or dispute is resolved before it reaches court.
Partners are jointly and severally liable for the debts of the firm. That means a creditor can pursue you personally for the whole amount, regardless of your profit share, which is why structure and insurance should be reviewed at the same time as the agreement.
What we make sure your agreement covers.
Capital, profits and drawings
What each partner contributes, how capital accounts are maintained, how profits and losses are shared, what regular drawings are permitted and how the partnership is funded if it needs more money.
Authority and decision-making
Which decisions a managing partner can take alone, which need a majority, and which need unanimity, borrowing, admitting a partner, changing the business, or committing the firm beyond a set value.
Exit, retirement and death
Notice periods, compulsory buy-out mechanics, valuation methodology, payment over instalments, and what happens to a deceased partner's interest so the estate is not left in limbo.
Restraints and client protection
Reasonable non-compete and non-solicitation obligations, confidentiality, ownership of client relationships and work product, and treatment of the firm's name and goodwill.
You need a partnership agreement if.
- You are starting a business with someone and sharing profits
- Partners are contributing unequal capital, skill or time
- You want a partner to be able to retire without dissolving the firm
- You need to admit a new partner or promote an employee to equity
- A partner has died, become ill or wants to leave
- You are converting a partnership into a company or trust structure
- You are operating a professional practice with insurance obligations
- You already trade as partners with no written agreement
If you are already in business together without a written agreement, you are operating on the Partnership Act's default terms right now. It can be fixed, but it is far easier before a disagreement.
How we prepare a partnership agreement.
- 01
Structure discussion
We confirm whether a partnership is the right vehicle at all, against a company or unit trust, and check the liability and tax consequences with your accountant.
- 02
Term sheet
A short plain-English summary of contributions, profit share, authority, exit and restraints for all partners to agree before drafting.
- 03
Drafting
A full agreement prepared, with the Partnership Act defaults displaced where you want a different outcome.
- 04
Review and negotiation
Amendments across a round of comments from each partner and their advisers, with the practical consequences explained.
- 05
Execution and register
Signing arranged, capital accounts opened, and ABN, insurance and banking updated to match the agreement.
Transparent partnership fees.
Partnership agreements are drafted for a fixed fee quoted before we start, covering the term sheet, the agreement and one round of negotiation. Deeds of admission, retirement or variation for an existing partnership are separately quoted and are usually a smaller fixed fee.
FAQs
Partnership agreement FAQs.
Still unsure? Call us on (03) 9008 7224 and speak to a lawyer, not a call centre.
Do I legally need a partnership agreement?
Should we be a partnership or a company?
What happens if a partner wants to leave?
Can a partner bind the firm to a contract?
How is a partner's share valued on exit?
Can we vary the agreement later?
What is a limited partnership?
Related services.
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Learn moreShareholder agreements
Control, dividends, deadlock and exit settled between owners before it matters.
Learn moreDirector & shareholder disputes
Deadlock, oppression and exit disputes between the people who own the company.
Learn moreGoing into business with someone?.
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