Partnership Law Solicitors
Coronavirus advice for business
What happens if a partner becomes ill or dies?
What happens to their share of the partnership business in such circumstances?
Illness is only mentioned once in the Partnership Act 1890 - that partners can apply to the court to have a partnership dissolved when a partner is incapable of performing his duties. Such incapacity has to be permanent and not temporary, and so a (hopefully) short bout of illness will not affect the ill partner's position as a partner.
On death, though, the default rule under the Partnership Act 1890 is that the partnership is dissolved. Commonly, the remaining partners would carry on business as usual and do so by using the capital or assets of the deceased partner. In such circumstances the remedy for the beneficiaries of the deceased partner would be a settlement of accounting which is only a monetary remedy – importantly, the beneficiaries of the deceased partner have no right to be a partner themselves.
However this default rule is subject to agreement of the partners and therefore it is open to the partners to set out what happens on death in a partnership agreement e.g. it could be that the beneficiaries would become a partner and take on the share of the deceased partner so that no monetary amount is paid out, or the agreement could set out now how the monetary amount is calculated and how it is paid (e.g. in one lump sum or in payments to help the cashflow of the partnership).
Another important factor is if the partnership has heritable property, whether the property should be revalued so that the deceased partner's beneficiaries would receive a share reflecting the property's true market value.
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Key contact - Stephen Chan.
Stephen has a wide range of experience in corporate and corporate finance work, including mergers and acquisitions, management buy-outs, private equity, joint ventures and public offerings. He has been recommended by Legal 500 2018 and has been described as "detailed-oriented and focused" and "very commercial". Stephen is the Legal Secretary to the Edinburgh Comedy Awards and also previously acted as Company Secretary to two PLCs. View full profile.
Partnership Law Expertise
You may have heard of Partnership law referred to in many different contexts, from being used in complex private equity funds and professional partnerships to a more humble farming partnership. You may also think it can't be the same law which applies in all these different contexts and you will be correct, the answer is simply that it is not the same law.
There are actually three different entities with the name partnership, being (i) a partnership; (ii) a limited partnership; and (iii) a limited liability partnership (or known by its abbreviation LLP), each with its different legislation and case law.
Why choose us?
What sets us apart from other legal advisers is our in-depth knowledge of all forms of partnership law. Whether you are an entrepreneur looking to set up a partnership with friends or a private equity investment fund looking to use a limited partnership as your preferred structure, we have the expertise to advise you.
Our team has a proven track record of advising professional services firms including accountants, IFAs and estate agency firms, with a particular focus on the healthcare sector. In addition we advise farming partnerships and partnerships in the retail and food and drink industry.
We also frequently advise on limited partnerships and their use as private equity funds, property investment funds (including student accommodation) and in connection with central asset reserves for pension schemes. Some of our Partners have been particularly active contributing towards the consultations on proposed new legislation in the area of Scottish Limited Partnerships, a niche area of partnership law.
In addition, we are the specialist firm of choice to more than 350 of Scotland's smaller law firms, through our HM Connect support and referral network. This role sees us advise on a significant number of partnership matters relating to law firms and also give specialist opinions on complex partnership problems for these law firms' clients.
Chambers UK Guide to the Legal Profession regards us as a noted firm for Partnership law.
Chambers UK Guide to the Legal Profession regards us as a noted firm for Partnership law. Partner Stephen Chan has published a book "A Practical Guide to Partnership Law in Scotland" for Thomson Reuters.
Why choose us?
- Preparing partnership agreements.
- Advising on exits of partners including deeds of retirement.
- Advising on admissions of new partners.
- Advising on contentious partnership matters such as share of profits on a disp
- Advising on converting partnerships into LLPs.
- Formation of limited partnerships for use as carry, co-invest and feeder vehicles in private equity funds and property investment funds, and use in pension schemes.
- Preparing and advising on limited partnership agreements and amended limited partnership agreements.
- Advising on Scots law aspects of limited partnerships including its separate legal personality.
- Giving opinions to funders and investors to limited partnerships.
- Advising on the persons of significant control legislation.
- Preparing LLP members' agreements for LLPs.
- Advising on exits of members including dealing with transfers of interests.
- Advising on admissions of new members.
- Advising on disputes between members.
- Acting on sale of the LLP whether by way of disposal of all the members' interest or the business and assets of the LLP.
Call us for free on 0330 159 5555 or complete our online form below for legal advice or to arrange a call back.