Partnership Agreement Ireland (Partnership Act 1890)

Irish law treats a partnership as a matter of fact. Under section 1 of the Partnership Act 1890, a partnership exists whenever persons carry on a business in common with a view of profit, so two people who run a van under a shared trading name and split the profit are already partners, signed or not. Sharing gross takings would not be enough on its own under section 2(2). A partnership agreement leaves the firm in place and replaces the statutory defaults with terms the partners have chosen. Under section 5 every partner is an agent of the firm, and because the firm has no legal personality of its own, each partner is personally liable, without limit, for its debts. That explains why so much of the document deals with authority, spending limits and exits.

A limited partnership under the Limited Partnerships Act 1907 is a different vehicle: it must be registered with the CRO and needs at least one general partner with unlimited liability. A private company limited by shares is a separate legal person under the Companies Act 2014, and its owners sign a shareholders' agreement instead. If limited liability matters more than simplicity, the company formation and shareholder documents for Irish businesses are the better starting point.

The Partnership Act 1890 still governs Irish partnerships, and most of its rules apply only "subject to any agreement" between the partners. Section 24 gives every partner an equal share of capital and profits, refuses interest on capital, allows 5% a year on advances, denies any salary, and requires unanimity to admit a partner or change the nature of the business. Section 25 adds that no majority can expel a partner without an express power. Where no fixed term is agreed, sections 26 and 32(c) let any partner dissolve the firm by notice, and section 33 dissolves it on the death or bankruptcy of a partner. A written partnership agreement can displace any of those rules. This one keeps the sensible ones (no interest on capital, no salary unless everyone agrees, unanimity to admit a partner) and overrides the rest: profit shares follow what each partner agreed, a partner can be expelled for cause, nobody can dissolve the firm by a simple notice, and the others can carry on after a death or bankruptcy.

Two other regimes sit alongside the Act: business name registration and tax. The Registration of Business Names Act 1963 requires a firm to register its name with the Companies Registration Office unless the name consists only of the true surnames of all the partners, with or without first names or initials. Registration is due within one month after the name is adopted, on Form RBN1A, and the certificate must be displayed at the principal place of business. On the tax side, the firm is not assessed on its profits; each partner files a personal Form 11, while the partner first named in the partnership agreement, if resident in the State and active in the business, acts as precedent partner and delivers the firm's return under section 959I of the Taxes Consolidation Act 1997, as Revenue's Form 1 (Firms) partnership tax return confirms.

The classic case is two friends or former colleagues opening a business under a trading name, each putting in savings and expecting a monthly income. The disputes that end these firms are rarely about the work. They are about one partner drawing more than the profits justify, a large purchase made without asking, or a partner who wants out and expects to be paid for goodwill. Writing those answers down costs an afternoon; litigating them under section 35 costs far more.

Family businesses come next: a brother and sister taking over a parent's shop, or a couple running a guesthouse. A sole trader who brings in a partner needs a partnership agreement too, and a fresh business name registration, because the CRO treats the partnership as a new registrant. Firms that have traded informally can sign now and set the commencement date on the day they actually started. One edge case: premises owned by one partner stay that partner's property unless agreed otherwise, and a written lease or licence from the Irish lease and property documents keeps the firm's occupation clear. Once the firm hires, the employment contracts and HR letters for Irish employers follow.

The agreement runs to 32 clauses and a schedule listing each partner's capital and profit share. The opening clauses fix the firm name, the place of business, the start date and the accounting date, and state that the firm is a general partnership with unlimited liability. Capital sits in capital accounts that earn no interest, while profits, losses and drawings run through current accounts settled when the annual accounts are signed.

• Decisions in the ordinary course pass by a majority, counted one vote per partner or by profit shares, and nobody has a casting vote.
• Ten matters always need every partner's written consent, including spending above a threshold you set and admitting a partner.
• When a partner retires, is expelled, dies or is adjudicated bankrupt, the others buy the outgoing share, valued with goodwill at fair value, by monthly instalments with interest; in a firm of two, the remaining partner may carry on alone.
• Expulsion is available on seven grounds, from unremedied material breach to insolvency or loss of a required licence.

Protective clauses close the document: confidentiality and data protection under the GDPR and the Data Protection Act 2018, non-solicitation, an optional non-compete limited in time and area, valuation by an independent chartered accountant, and a dispute clause that moves from mediation under the Mediation Act 2017 to the Irish courts or to arbitration under the Arbitration Act 2010. Founders weighing a company can compare the shareholder and board documents in our business section.

You start with the date, the name of the firm and its principal place of business, then describe the business, the start date and the accounting date. The next screen asks whether the firm name is made up only of the partners' surnames; that answer decides whether the partnership agreement carries the CRO registration duties. After choosing two, three or four partners, you complete one screen per partner with name, home address, capital and profit share. The profit shares must add up to 100, and losses follow the same split.

The form then asks whether partners work full time or only the time reasonably needed, and whether votes count per head or by profit share. A money screen collects the bank, the monthly drawings, the amount above which two partners must approve a payment and the threshold needing everyone's consent. You set the retirement notice and the months over which a leaving partner is paid, decide on the non-compete and choose courts or arbitration. Use Next and Back to move between screens and Finish to generate the document. The same approach runs across the Irish legal templates available on Captain.Legal.

The most expensive mistake is treating the partnership agreement as a formality and leaving default numbers in place. Partners who put in very different capital but sign up for equal profit shares often regret it once the work and the takings diverge. Another frequent error is per-head voting in a two-partner firm: with two votes, any disagreement is a deadlock, which is why the template adds mediation after two divided meetings. Firms also miss the CRO deadline. Every partner can be fined for an unregistered name, and a name that still carries the surname of a partner who left can leave that person exposed to new creditors under sections 14 and 36.

Restrictive covenants cause the rest of the trouble. Irish courts enforce a non-compete only if it protects a legitimate interest and goes no further than needed, and a judge will strike out an excessive restriction rather than rewrite it. Twelve months over the county where the firm has clients is usually defensible; five years across the whole country rarely is. Finally, a partnership does not protect personal assets: if the firm cannot pay, creditors can look to the partners' own property, so weigh a company structure, and check public liability and professional indemnity cover, before signing any partnership agreement.