NSW Limiting Liability in a Partnership Agreement?

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15 August 2016
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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.
 

Tim W

Lawyer
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28 April 2014
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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?
 
15 August 2016
2
0
1
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?

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

Tim W

Lawyer
LawConnect (LawTap) Verified
28 April 2014
4,913
820
2,894
Sydney
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.