Partnership Agreements

Partnership Agreements Contracts Partnership disputes     Widespread Cause intractable problems Expensive No winners Written agreements  Don’t prevent disputes  Can avoid common problems  Method to resolve problems that do arise Partnership Act 1890  Partnership ends on – Death – Retirement – Bankruptcy – Of any partner Partnership Act 1890  All partners can access bank account  All partners entitled to run the Business  A partner can end the partnership without notice  Decisions made by simple majority except when taking on new partner Partnership Act 1890  No partner can be expelled from the partnership  Partners must not compete with partnership  All partners are agents of partnership and can make decisions to which all partners are bound Aims  Ensure equity for all partners  Ensure reasonable security  Equity does not imple equality Headings      Date of document Name of partnership Date when partnership commences Nature of practice business Duration of partnership Headings      Practice premises Partnership capital Partnership expenses Partnership income Sharing the profits Headings      Attending to affairs of practice Managing practice staff Partnership decisions Taxation Holidays and study leave Date of document  Liability begins on commencement date not signing date  Commencement date – Date partnership begins – Different from signing date Partnership name  Name under which partnership will practice  Address of surgery premises Nature of business  Will carry on the profession of NHS general practice  Limits the extent to which partners are liable as agents of the firm  Prevents any partners extraneous business activities being incurred on others Duration  Indefinite duration – For the joint lives of all the partners  Failure to state duration renders it a partnership at will  Limited duration encourages competition among partners in anticipation of termination of agreement Practice premises  State which partners own the property  Confirm rights of other partners to use the premises  Right to use property for period after property owning partner retires  Lease or licensing arrangement between partners should be done in separate legal document  New partner should take independent advice Partnership capital      Equipment Drugs Surgery fittings Furniture Cash used as working capital Partnership expenses       Staff Accounting Rent and rates Heating and lighting Cleaning Maintenance Partnership income     GMS income Non GMS income PGEA Seniority Profit shares  Profit – Practice income – practice expenses     Size of each partners share How it is calculated Any planned changes Sale of goodwill Sale of goodwill       Share significantly less than others Parity in greater than 3 years Longer or shorter holidays No study leave if others get it Restriction on taking pt’s onto list Terms of expulsion, retirement or dissolution not mutual Sale of goodwill  Asked to “buy in” except partnership capital  Premises sold for more than going rate Affairs of practice     Time partners are expected to work Attention partners are expected to give Reference to outside work Time for medical politics should be allowed Practice staff  Who has responsibility for staff  Hiring and firing need all partners consent  Prevent one person answering or sending letters related to employment Partnership decisions  What size of majority needed  Important decisions should need unaimity Tax     Partners tax liabilities now independent Staff tax and NI need to be paid Money needs to be set aside for this Separate bank account Holidays     Partners entitlement to holidays Partners entitlement to study leave Locum cover practice should pay No. of partners away at one time Sickness and Pregnancy  Sex discrimination act  Pregnant partner treated equally to male partner with masculine illness  Locum cover for maternity leave shoul dnot be paid for by pregnant partner unless this also applies to sick leave BMA Recommendations  14 weeks min maternity leave  Locum should cover actual work done  Max period of absence after which if does not return can be expelled  Taking maternity leave should not decrease right to holiday or study leave  Adoption leave Leaving the partnership     Conditions under which partners may retire Required period of notice Retire on quarter day HA require 3 months notice Expelling a partner  Clause to allow majority decision in specific circumstances – Prolonged incapacity – Mental health problems – Removal or suspension from medical register – Gross breech of practice agreement – bankruptcy Retirement  NHS GP’s must retire on 70th birthday  Partnership may state a different age Restrictive covenants     Legal to protect goodwill Reasonable restrictions Apply equally to all partners Applies only to normal GP work MPC guidance  The more unreasonable the restrictions the easier it is to say it constitutes a sale of goodwill  Upper limit = radius of 2 miles  Max period of 2 years  Can’t prevent other medical employment Defence body subscriptions  Clause to stae each partner must belong to a defence body Banking arrangements     Should specify partnerships bankers Arrangements for signing cheques All partners signatories to account Limit beyond which 2 signatures necessary for cheques Partnership accounts       Should name partnership accountants Arrangements for drawing up accounts Date of practices financial year end All partners sign accounts Accounts must be binding All partners have access to accounts if not indicates Dr is employee Arbitration  Provision for disputes to be referred to arbitration  Usually ends in final breakdown of partnership  Expensive and legalistic  Think long and hard before invoking