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Partnership Agreement or Partnership Deed?

We are often asked by GP practices whether they should enter into a GP Partnership Agreement or a GP Partnership Deed. Some degree of confusion is understandable, since these terms are often used interchangeably when, in fact, they are not the same.

The law is very clear that a Partnership Agreement does not need to be written down. It follows that if you are in a partnership, your relationship will be governed by the terms of a Partnership Agreement. Unless you can demonstrate that you have agreed something else, the terms of the Partnership Agreement will be those which are set out in the 1890 Partnership Act and will be governed by normal contract law.

Additional terms or variations to the default Partnership Act terms can be agreed verbally;  by way of a course of conduct; via supporting documents such as meeting minutes, correspondence, accounts etc; and by signing a Partnership Agreement. Since a Partnership Agreement can be made so informally, it can sometimes be a challenge to establish the ‘real’ agreement from a mass of contradictory evidence.

A GP Partnership Deed requires more formality. It must be in writing, and it must make clear that it is intended to be a Deed – normally on the face of the document. A Partnership Deed must also be executed as such, which means that each partner’s signature must be witnessed by an independent person. Finally, the Partnership Deed must be ‘delivered’ which means that the partners need to in some way demonstrate the date from which they intend to be bound.

The contents of a written Partnership Agreement and a Partnership Deed might, to all intents and purposes, read the same, but key differences are:

  1. The limitation period for enforcing a Deed is generally 12 years, and is only 6 years for a Partnership Agreement.
  2. Unlike an Agreement, a Partnership Deed does not require ‘consideration’. Since it can sometimes be unclear whether consideration has been provided in a GP partnership, this can leave a Partnership Agreement open to challenge.
  3. Certainty.  A Partnership Deed can only be varied in the way the parties intended.  Sometimes a GP Partnership Deed will require another Deed to vary it, or more commonly it will require the express written consent of all the partners to vary it.
  4. If you wish to transfer an ownership interest in the surgery premises then this must be done by way of a Deed.
  5. You need a Deed if you wish to include a power of attorney in relation to the transfer of your PMS, GMS, APMS or other NHS Contract(s).

There are therefore advantages in signing a Partnership Deed rather than a Partnership Agreement, and this is why we advise all our clients to sign a Deed.

Posted on February 12th 2014 in News and Publications, Newsletters

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