In Australia a partnership is the relationship which exists between persons carrying on a business in common with a view to profit.
In the absence of an agreement between the partners, partnerships are regulated by the Partnership Acts of each state and territory of Australia.
Because a partnership is not a separate legal entity:
- each partner is the agent of the other partners and may make contracts, undertake obligations and dispose of partnership property on behalf of the partnership in the ordinary course of the partnership business
- arrangements between partners will protect partners in their relationship with each other. Third parties, without knowledge to the contrary, however, are protected from actions committed by partners beyond their authority
- each partner is personally liable, jointly and severally, for the liabilities of the partnership. The liability of each partner is unlimited except in the case of limited partnerships
- the property of the partnership is owned by the partners personally
- the partners cannot contract with the partnership
- each partner is liable personally, jointly and severally, for torts committed by the partners.
The partnership must submit an annual tax return, although it is the partners individually who must pay tax on their share of partnership profits and not the partnership as a whole.
If the partnership carries on business, other than under the names of the partners, the business name must be registered in each relevant state and territory.
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The information contained in this article has been prepared by the Minter Ellison Legal Group. Professional advice should be sought before applying the information to particular circumstances.
