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How does a Partnership Operate?

Updated: Jun 2, 2022

A partnership agreement is a legal agreement that dictates the Partnership's operations.


While this is not mandatory by the Partnership Act 1961, avoiding a partnership agreement can lead to significant complications in the future.

Contents in Partnership Agreement

Since a formal agreement is not required, there is no clear list of what it should include, but it usually covers the followings:-

  • Contribution to capital

  • Management of the business

  • Distribution of profits

  • Apportionment of losses

  • Remuneration for acting in the partnership business

  • Introduction of the new partner

  • Change in the nature of the partnership business

  • Partnership property

If the partnership agreement is silent or in the absence of a partnership agreement, then the rights of the partners are implied from the provisions of the Partnership Act 1961.