In Western Australia, the operation of a partnership is governed by common law principles and the Partnerships Act 1895 (WA) (“Act”).

Section 7(1) of the Act defines a partnership as “the relation which subsists between persons carrying on a business in common with a view of profit”. Section 7(2) of the Act also states that “In deciding whether a partnership does or does not exist in any particular case, the court shall have regard to the true contract and intention of the partners as appearing from the whole facts of the case”.

The key characteristics of partnerships include the following:

• the partnership does not have a separate legal identity like a corporation and is represented by its individual partners;
• the relationship between the partners is governed by a partnership agreement between the partners, such as their voting rights and rights to a distribution of profits;
• the partners have unlimited joint and several liability for all of the liabilities of the partnership but may seek contribution from each other; and
• subject to applicable law in certain circumstances, the partnership may distribute profits as it sees fit but each partner is taxed at his or her personal taxation rates.

At Vogt Legal we are experienced in advising clients with respect to all aspects of partnerships and prepare partnership agreements that clearly define how the partnership will operate to avoid disagreement and to reduce the risk of disputes arising between the partners.