The Risk Of Uncertain Partnership Arrangements

The risks for partnerships operating without a written partnership agreement in place are well known. A recent Court of Appeal case is a useful reminder that these risks can arise in the period after new partners join a business but before a new formal agreement is signed.

Cheema v. Jones and others

In Cheema v. Jones and others [2017] EWCA Civ 1706, the Court of Appeal considered a dispute in relation to a medical practice. Two doctors had a written partnership agreement (the Original Agreement) and invited three further doctors to join them in the practice. The new doctors started working at the practice whilst the terms of a new partnership agreement were negotiated.

Prior to signing the new agreement a dispute arose. Cheema (the Appellant), who was one of the original partners, apparently suggested (to one of the new partners) that the other original partner, Jones, should retire. Jones was informed and "berated [the Appellant] in unflattering terms". The