More and more we see cases of farms (which have often increased dramatically in value over the years) being run by a partnership without any written partnership agreement, or on the basis of an agreement which is entirely out of date. 

Just as we encourage all of our clients to make and then review their wills regularly, we encourage our farming clients to have a look at their farming partnership agreements and make sure that they are up-to-date – and if no agreement exists, to make sure that one is put in place.

Some of the key problems which arise include the following:

1. If there is no partnership agreement in place – then the Partnership Act 1980 (Act) applies. In many cases this will give rise to a host of unintended consequences. The most onerous of these is that the partnership is automatically dissolved on the death of any partner.

2. If is it not clear whether the land, buildings and farmhouses on which the farming business operates are partnership property, or owned personally outside the partnership – then inheritance tax reliefs may be in jeopardy and a large tax bill could be the result.

3. If the agreement conflicts with the terms of a partner’s will – then on deathsignificant costs can be run up.

4. If thought has not been given to rules about incoming and outgoing partners – then difficult issues could arise, particularly in the case of marriage, divorce, retirement, bankruptcy or loss of capacity.  Under the Act a new partner can only be admitted with the unanimous consent of the existing partners; this may not be appropriate in all cases. Relying on the Act to remove a partner is also extremely difficult.

5. If thought has not been given to how to value a partner’s share and payment terms on leaving – then the partnership could be saddled with a payment obligation that is difficult to comply with and which could jeopardise the business.  

If you would like any further information about this, please contact Corporate and Commercial Solicitor Mary Anne Fedeyko by email at or by phone on 01206 217049. Legal 500 Leading Individual Mary Anne leads the Corporate and Commercial team at Thompson Smith and Puxon Solicitors.