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NSW Limiting Liability in a Partnership Agreement?

Discussion in 'Other/General Law Forum' started by Jonny Firepant, 15 August 2016.

  1. Jonny Firepant

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    I have recently set up a business with a partner (under a partnership agreement structure) and am now needing to mitigate any risk to our (my wife and I) personal assets, as under this structure there is no limit to the liability.

    I am aware a corporation has limited liability to the worth of that business, and also implementing a trust places limits on the value in which one can be sued for. Both options are viable, however, it means re-registering the business and a new ABN.

    Obviously, I do not intend to be facing lawsuits or litigation regularly, however, my wife has raised her concerns about our personal assets being at risk should the business be faced with anything of the like.

    Is there an option for a contractual agreement to be implemented in order to place limitations on liability? I have been offered advice which leads me to believe so.

    Thanks for the help.
     
  2. Tim W

    Tim W Lawyer

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    The easiest way to do this is by reframing the partnership agreement.
    When you say partnership, are you using that term in the legal sense, or in the way they use it in the marketing trade?
     
  3. Jonny Firepant

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    The partnership is in the legal sense. We are yet to develop a partnership agreement.
     
  4. Tim W

    Tim W Lawyer

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    In a partnership, as a default position,
    partners are jointly and severally personally bound by, and responsible for, the actions of each other.

    It is possible to prepare partnership agreements that provide alternative arrangements.
    However, I suggest most strongly that to attempt to do so
    without the help of a lawyer who is experienced in preparing partnership agreements,
    is a very high risk strategy.
     
  5. roymathew

    roymathew Member

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    This is an outstanding forum. I learned a lot much from this forum.

    Thanks again
     

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