Partnership Agreement in Australia: Template and Key Clauses (2026)

A partnership agreement in Australia is the contract between people who carry on a business together with a view to profit. It sets how they share profits and losses, make decisions, bring in money, and handle a partner leaving or the business ending. Without a written agreement, a partnership is not lawless: each state and territory has a Partnership Act that fills the gaps with default rules. The problem is that those defaults rarely match what partners actually intend, so a clear agreement is what keeps a partnership stable. This is general information, not legal advice. Partnership and tax rules differ across Australia, so take advice before you start. ## The default rules you are overriding Each Australian state and territory has its own Partnership Act, for example the Partnership Act 1892 in New South Wales and the Partnership Act 1958 in Victoria. These Acts set defaults such as equal sharing of profits and losses, no automatic salary for working partners, and the right of any partner to dissolve a partnership at will. A general partnership also carries a crucial feature: partners are jointly liable for the debts of the business, and that liability is unlimited unless a limited partnership or incorporated structure is used. A written agreement lets the partners change the defaults that do not suit them, but it cannot remove the external liability of a general partnership to third parties. ## Key clauses, clause by clause 1. Parties and name. Name the partners and the business name, and state the kind of partnership. 2. Business and term. Define the business and whether the partnership runs for a fixed term or until ended. 3. Capital contributions. Set what each partner puts in, in money or assets, and how capital accounts are kept. 4. Profit and loss sharing. State the shares of profit and loss, which need not be equal, and when and how drawings can be taken. 5. Salaries and interest on capital. Decide whether working partners receive a salary and whether capital earns interest before profits are split. 6. Management and decisions. Set who manages what, which decisions need all partners and which a majority, and how meetings and votes work. 7. Banking and accounts. Set banking authority, how books are kept, and when accounts are prepared. 8. Admitting a new partner. Set how a new partner can be admitted and on what terms. 9. Retirement and expulsion. Set how a partner can retire, whether a partner can be expelled and on what grounds, and the notice required. 10. Death or incapacity. Set what happens to a partner's share on death or incapacity, so the business can continue. 11. Valuation and buyout. Set a clear method to value a departing partner's share and how and when it is paid, to avoid a dispute. 12. Restraint and confidentiality. Protect the business with reasonable restraints on a departing partner and confidentiality duties. 13. Dissolution. Set how the partnership can be wound up and how assets and liabilities are distributed. 14. Dispute resolution and governing law. Provide a dispute process and choose the law of the relevant state or territory. ## Liability and exit are the pressure points Two things cause the most trouble in partnerships. The first is liability: in a general partnership each partner can be personally liable for debts the others create in the business, so partners must trust each other and may consider a limited or incorporated structure. The second is exit: without a valuation method and a continuity clause, the departure, death or fallout of one partner can force the whole business to wind up, even when the remaining partners want to carry on trading. A good agreement plans for both of these pressure points from the very start, rather than leaving them to be argued over later. ## Common mistakes to avoid - No written agreement, so the state Partnership Act defaults apply even when they do not suit the partners.

• No valuation method for a departing partner's share, so every exit becomes a fight.
• No continuity clause, so the business must dissolve when one partner leaves or dies.
• Unequal contributions but equal default profit sharing, because nothing was agreed.
• Ignoring the unlimited personal liability of a general partnership.
• No clear decision rules, so the partners deadlock.
• No restraint or confidentiality, so a departing partner takes clients and know how. ## Keeping a partnership governed A partnership agreement creates living obligations: capital calls, drawings rules, decision thresholds, admission terms and buyout timetables. As partners come and go and the business grows, those terms need to be found, applied and sometimes updated. When the agreement sits in a drawer and the real rules live in memory and email, partners end up arguing about what they agreed, usually at the worst moment. Adira is an AI workspace, built on Claude, where you can draft a partnership agreement from a tuned template, review it for risk such as a missing buyout or continuity clause, sign and stamp it in flow, and track the obligations and key dates it creates in one place, with public per seat pricing and a 7 day trial. It is India first and global capable, and a command centre view of your obligations is on its roadmap. The essential point holds with or without a tool: write down what overrides the Partnership Act defaults, plan for exit and death with a valuation and continuity clause, and be clear eyed about the personal liability a general partnership carries.