Start your business partnership on solid ground. Define profit sharing, roles, and exit terms with a professionally drafted agreement. AI customises it for you.
Capital contributions, roles, responsibilities, and decision-making authority for each partner.
How profits and losses are allocated, distribution timing, and partner drawings.
Voting rights, matters requiring unanimity, and deadlock resolution mechanisms.
Restrictions on competing activities and protection of partnership information.
Partner retirement, expulsion, buy-out valuation methods, and payment terms.
Events triggering dissolution, winding up procedures, and distribution of partnership assets.
Set clear expectations before you start trading. Avoids costly disputes down the track.
Formalise your arrangement and override the default rules in the Partnership Act.
Accountants, lawyers, and medical practitioners forming or restructuring a practice.
Short-term or project-based partnerships with defined scope and profit-sharing.
Select the partnership agreement from our library.
Gemini AI fills in partner names, contributions, profit-sharing, and terms. All placeholders removed.
Review and send to all partners. Everyone signs electronically from any device.
A partnership agreement governs the relationship between people who run a business together and share its profits. In Australia, a partnership exists at law the moment two or more people carry on a business in common with a view to profit, whether or not they have written anything down. If they have not, the default rules in their state or territory's Partnership Act fill the gaps, and those defaults can be blunt: equal profit sharing regardless of contribution, and dissolution of the whole partnership when one partner leaves. A written agreement replaces those defaults with terms the partners actually want.
Every partnership should have a written agreement, ideally before trading begins. New business partners use it to set expectations early, existing partnerships operating on a handshake use it to override the statutory defaults, and professional practices such as accountants, lawyers, and medical practitioners use it to manage a multi-partner firm. Joint ventures structured as partnerships also rely on it to define scope and profit sharing for the project.
A complete partnership agreement records each partner's capital contribution, role, and decision-making authority, sets out how profits and losses are shared and when partners can draw, and defines voting rights and which decisions need unanimity. It should include dispute resolution and deadlock mechanisms, confidentiality and non-compete terms, and clear exit and buy-out provisions for retirement, expulsion, death, or incapacity. Finally, it should set out what happens on dissolution and how partnership assets are distributed.
In a general partnership, partners are usually personally liable for the partnership's debts, and one partner can bind the others through acts within the ordinary course of business. This makes the clauses on authority, decision-making, and the admission of new partners genuinely important, because every partner carries the consequences. Partners concerned about liability sometimes use a limited partnership or an incorporated structure instead, which changes the liability position and is worth considering for higher-risk ventures.
A partnership agreement is an ordinary contract, needs no witness, and can be signed electronically under the Electronic Transactions Act 1999 (Cth). The most common mistakes are not having an agreement at all and relying on the Partnership Act defaults, leaving profit sharing or exit terms undefined, ignoring deadlock provisions in a two-partner business, and underestimating personal liability. Defining profit sharing, exits, and dispute resolution upfront is what keeps a partnership functioning when things get difficult.
This page is general information about partnership agreements in Australia and is not legal advice. Partnership law and liability differ across states and structures. For significant ventures, seek advice from a qualified Australian lawyer or accountant.
It is not legally required, but it is strongly recommended. Without one, the Partnership Act in your state or territory applies default rules that may not suit you, such as splitting profits and losses equally regardless of how much each partner contributed. A written agreement lets you set terms that match your actual arrangement and avoids relying on defaults you may not even know about.
In a general partnership, yes. Partners are usually jointly (and in some cases severally) liable for the debts and obligations of the partnership, which means your personal assets can be at risk. This unlimited liability is one of the most important reasons to set clear rules about decisions and authority. Limited partnerships and incorporated structures change this, and are worth considering for higher-risk ventures.
Profit and loss sharing can be equal, proportional to capital contributions, weighted by effort or role, or a blend. The agreement should state how profits and losses are allocated, when distributions are made, and how much each partner can draw. Setting this out clearly prevents the single most common source of partnership disputes.
A good agreement sets out an escalation path: informal negotiation first, then mediation, and arbitration or litigation if needed. For two-partner businesses it should also include a deadlock mechanism, such as a casting vote, an independent mediator, or a buy-sell provision, so the partnership is not paralysed when the partners cannot agree.
The agreement should cover exit and continuity: notice periods, how the departing partner's interest is valued, buy-out terms, what happens on death or incapacity, and any non-compete obligations. Without these provisions, the default rules in the Partnership Act may dissolve the whole partnership when one partner leaves, which is rarely what the others want.
A partnership agreement is generally an ordinary contract, so no witness is required and electronic signatures are valid under the Electronic Transactions Act 1999 (Cth). Each partner signs and the agreement binds them. If any part is structured as a deed, deed execution formalities would apply to that part.