Partnership agreement, Harbourline Physiotherapy
Partnership agreement template
Three physiotherapists have run one Newcastle practice together since 2024 without anything in writing. This agreement records what the handshake never covered: uneven capital sitting beside uneven hours, the six decisions no partner can make alone, and what a leaving partner is owed.
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Section by section
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- Contents
- Fifteen clause groups with their numbers, from capital through to dissolution, so a partner can turn straight to the one that matters.
- Parties
- Three named partners with their suburbs, then a paragraph explaining that the practice already exists and this document records the terms they have been working to.
- 1. The partnership
- Practice name and services, a commencement date backdated to 1 July 2024, what counts as partnership property including the patient list and goodwill, and how the joint lease is released.
- 2. Capital
- A table of contributions, profit shares and monthly drawings for each partner, then capital accounts, the rule that no partner can be forced to contribute more, and interest on partner loans.
- 3. Profits, losses and drawings
- The 40, 40 and 20 split, losses in the same proportions, drawings taken on account of profit, repayment of an overdrawn account, and how partnership tax is handled.
- Liability warning
- A warning panel spelling out joint and several liability for the whole of a partnership debt, and pointing forward to the insurance clause as the practical answer.
- 4. How decisions are made
- Ordinary operating calls any partner may make alone, six numbered decisions that need all three in writing, and a rule that an approved minute counts as that writing.
- 5. What each partner must do
- Four duties: hold registration and report anything affecting it within 48 hours, work the stated clinical hours, account for any benefit received, and enter every consultation on the day.
- 6. Outside work and 7. Banking
- Teaching and board seats are allowed, clinical work within ten kilometres is not; then two signatures above $5,000 and accounts by 31 October.
- 8. Admitting a partner
- Unanimous consent plus a deed of accession, and a buy in price that is paid to the partners being diluted rather than into the partnership.
- 9. When a partner leaves
- Six months notice, the three events that end a partnership immediately, the valuation formula, the instalment payout, and first refusal before a share is sold outside.
- 10. Death and incapacity
- The partnership continues between the survivors while the estate is paid out, and a long illness steps from a full share to half to nothing across twelve months.
- 11. Restraint and 12. Insurance
- A restraint that cascades through shorter periods and smaller radiuses until one is enforceable, then a four row table of covers with minimum limits and who holds each.
- 13. Resolving a dispute
- Four steps with deadlines: talk within seven days, the accountant within twenty one, mediation within forty five, and court only once those are exhausted.
- 14 and 15. Ending it, and general
- Dissolution by written agreement, the order proceeds are applied in, what happens to clinical records, then governing law and variation.
- Schedules and execution
- Schedule 1 lists equipment each partner still owns personally, Schedule 2 names the notice addresses and the accountant, then a signature block each.
Clauses in this document
What makes this document work
The exit is priced years before anyone wants to leave
The value of the practice is the average net profit of the three most recent completed years multiplied by 2.5, plus written down equipment and cash, less liabilities. Multiply by the profit share, add the capital account, pay a third within 60 days and the rest over eight quarters. Nobody negotiates a number while they are angry.
Uneven money and uneven hours are written on the same page
Two partners put in $60,000 and take 40 percent, the third put in $30,000 and takes 20. Clause 5 then sets 32 clinical hours a week for the first two and 16 for the third. The smaller stake and the smaller commitment sit close enough together that neither reads as a slight.
The liability warning has an answer attached to it
A warning panel says plainly that a creditor can recover the whole of a partnership debt from whichever partner can pay it. Twelve clauses later an insurance table sets $20 million of professional indemnity held by each partner individually, $20 million of public liability held by the practice, and seven years of run off cover paid for by whoever leaves.
Questions people ask
What happens if partners never sign a partnership agreement?
The partnership still exists, but the state Partnership Act fills the gaps. That usually means profits split equally whatever each partner contributed, no notice period, and the partnership dissolving when one partner retires, dies or becomes bankrupt. A written agreement is optional in every state, which is exactly why the default rules catch people out.
Does a partnership pay its own income tax?
No. The partnership lodges its own return but pays no income tax on the profit. Each partner declares their share in their personal return and pays their own tax and instalments on it, whether or not the money was actually drawn. Clause 3.5 says so, and adds that no partner is paid a salary and no superannuation is paid for a partner.
Is one partner responsible for debts another partner ran up?
In a general partnership, yes. Partners are jointly and severally liable, so a supplier or a lender can pursue the whole amount from whichever partner has assets, then leave that partner to chase the others. It is the single biggest difference between practising as a partnership and practising through a company.
How much notice should a partner give before leaving?
Long enough for the others to fund the payout and cover the clinical load. This agreement uses six months of written notice for a voluntary retirement, and says the partnership carries on rather than dissolving. Loss of registration, bankruptcy or serious misconduct ends a partnership immediately with no notice at all.
What does the agreement say about outside work?
It sets what a partner may do elsewhere. This agreement pairs outside work with the banking clause, which is where most small partnership friction actually lives. In a clinical practice one partner consulting elsewhere affects rosters and revenue, so the boundary is worth agreeing before it is tested.
Why does the agreement cover death and incapacity separately?
Because they are not the same event and neither is voluntary. This agreement gives them clause ten, apart from the clause on a partner leaving. Incapacity needs a decision about who acts and for how long, while death needs a valuation and a path for the estate, and mixing them leaves both unclear.
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