Why do I need a GP Partnership Agreement?

A partnership without a valid, signed partnership agreement will likely be operating as a ‘partnership at will’. This means that instead of working under terms agreed by the partners, the running of your practice is governed by the 1890 Partnership Act.

‘We have made an active choice not to have a partnership agreement because we all get on fine together’, is a phrase I often hear, but by choosing to have no partnership agreement, that partnership has - without realising - signed themselves up to be bound by the most basic and out-of-date partnership agreement out there - the 1890 Act. 

In these circumstances:

• All profits and capital are shared equally, regardless of contribution

• The partnership dissolves upon the retirement, death, or bankruptcy of any partner, thus frustrating the GMS contract and creating a risk that it may be lost, only to be retrieved by bidding for it against others

• There is no mechanism to expel or suspend a partner, regardless of behaviour

• Any one partner can unilaterally, for any reason, dissolve the partnership

• There is no mutual assessment for incoming partners, so a ‘day one’ partner cannot be removed, but they could dissolve your long-treasured partnership

• Almost all decisions can be passed by a simple majority of partners

• There are no rules to manage retirements, and therefore an awful lot to fight over

Clearly a lot of this is far from ideal and does not protect an individual partner nor the practice sufficiently.

On the other hand, having a valid partnership agreement will give you some rules to follow during certain processes, in difficult times, and in a dispute, narrowing down the scope of any arguments and steering things away from very expensive, time-consuming destructive processes.