This Act matters when two or more people carry on business together with a view to profit and have not put a company or LLP structure in place. The practical risk is that a partnership can exist even without a document called a partnership agreement. That can affect authority, profit shares, debts, exits and who is responsible when one partner signs or promises something.
Main laws
United Kingdom Act
Partnership Act 1890
The Partnership Act 1890 remains the core UK statute for ordinary business partnerships, including partner authority, default rights and...
In forceUnited KingdomPlain-English guide4 practical checks
Plain-English explainers, not legal advice. Use the linked official source for section-level detail, and get advice for your situation.
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Quick read
- This Act matters when two or more people carry on business together with a view to profit and have not put a company or LLP structure in place.
- The practical risk is that a partnership can exist even without a document called a partnership agreement.
Likely relevant if
- Professional partnerships and small trading partnerships
- Founder groups trading before incorporating
- Family businesses run without a company structure
Check first
- Confirm whether the relationship is actually a partnership
- Set authority, profit-sharing, capital and decision rules in writing
- Deal with partner exits, retirement, death and dissolution before a dispute
What this means in practice
Key points
- A partnership can be created by conduct, not just by signing a formal agreement.
- Each partner's authority should be clear before the business signs customer, supplier or finance documents.
- Exit rules are usually cheaper to agree while everyone still trusts each other.
When this law usually matters
Most businesses do not need to memorise the whole law. The useful starting point is to know when it is likely to affect a contract, customer journey, employee process, data flow or company decision.
Key points
- Professional partnerships and small trading partnerships
- Founder groups trading before incorporating
- Family businesses run without a company structure
- Businesses reviewing partner authority, profit shares or exits
What to check first
Sense check
- Confirm whether the relationship is actually a partnership
- Set authority, profit-sharing, capital and decision rules in writing
- Deal with partner exits, retirement, death and dissolution before a dispute
- Keep records of partner contributions, drawings and liabilities
Documents and workflows to review
Key points
- Partnership agreement
- Authority and signing rules
- Profit share records
- Exit and dissolution terms
- Business bank and liability records