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Partnership Agreements Contracts. Partnership disputes  Widespread  Cause intractable problems  Expensive  No winners.

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Presentation on theme: "Partnership Agreements Contracts. Partnership disputes  Widespread  Cause intractable problems  Expensive  No winners."— Presentation transcript:

1 Partnership Agreements Contracts

2 Partnership disputes  Widespread  Cause intractable problems  Expensive  No winners

3 Written agreements  Don’t prevent disputes  Can avoid common problems  Method to resolve problems that do arise

4 Partnership Act 1890  Partnership ends on –Death –Retirement –Bankruptcy –Of any partner

5 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

6 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

7 Aims  Ensure equity for all partners  Ensure reasonable security  Equity does not imple equality

8 Headings  Date of document  Name of partnership  Date when partnership commences  Nature of practice business  Duration of partnership

9 Headings  Practice premises  Partnership capital  Partnership expenses  Partnership income  Sharing the profits

10 Headings  Attending to affairs of practice  Managing practice staff  Partnership decisions  Taxation  Holidays and study leave

11 Date of document  Liability begins on commencement date not signing date  Commencement date –Date partnership begins –Different from signing date

12 Partnership name  Name under which partnership will practice  Address of surgery premises

13 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

14 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

15 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

16 Partnership capital  Equipment  Drugs  Surgery fittings  Furniture  Cash used as working capital

17 Partnership expenses  Staff  Accounting  Rent and rates  Heating and lighting  Cleaning  Maintenance

18 Partnership income  GMS income  Non GMS income  PGEA  Seniority

19 Profit shares  Profit –Practice income – practice expenses  Size of each partners share  How it is calculated  Any planned changes  Sale of goodwill

20 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

21 Sale of goodwill  Asked to “buy in” except partnership capital  Premises sold for more than going rate

22 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

23 Practice staff  Who has responsibility for staff  Hiring and firing need all partners consent  Prevent one person answering or sending letters related to employment

24 Partnership decisions  What size of majority needed  Important decisions should need unaimity

25 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

26 Holidays  Partners entitlement to holidays  Partners entitlement to study leave  Locum cover practice should pay  No. of partners away at one time

27 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

28 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

29 Leaving the partnership  Conditions under which partners may retire  Required period of notice  Retire on quarter day  HA require 3 months notice

30 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

31 Retirement  NHS GP’s must retire on 70 th birthday  Partnership may state a different age

32 Restrictive covenants  Legal to protect goodwill  Reasonable restrictions  Apply equally to all partners  Applies only to normal GP work

33 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

34 Defence body subscriptions  Clause to stae each partner must belong to a defence body

35 Banking arrangements  Should specify partnerships bankers  Arrangements for signing cheques  All partners signatories to account  Limit beyond which 2 signatures necessary for cheques

36 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

37 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



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