Protecting your family's interests with farm partnership agreements
farm partnership agreements
With the majority of farming and agribusinesses formed on the basis of a partnership between a group of family members, it is often felt there is no need for a written agreement to outline and protect financial and business assets.
However, without a formal Farm Partnership Agreement, partners have limited protections if disputes arise, will have uncertainty surrounding their share of the partnership financials and assets, and increasingly will have limited opportunity to borrow from banks and lenders, who in today’s climate ask for an agreement prior to lending.
A Farm Partnership Agreement is a formal document which aims to clearly define the conditions of a partnership and establish an agreement on ownership of all assets. This document will clearly outline shares of income and profits, contingency planning for if a partner should leave the business, an outline of how profits and losses on any sales of land will be dealt with, details of bank accounts borrowing and lending and details of how disputes can be resolved before they arise.
The Farm Partnership Agreement should be regularly reviewed to ensure all information remains accurate and up to date. In the event that a dispute does occur, the Farm Partnership agreement should protect you, ensuring a swift and fair resolution for everyone involved.
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Although we may feel confident that a family partnership will stick together and support each other; when the unexpected happens like a divorce within the family, a dispute between siblings over shares and work contributions, or the unfortunate event that someone dies within the partnership, things can change within an instant.
Without a Farm Partnership Agreement, not only do the chances of a partnership dispute increase significantly and your opportunities for borrowing from banks and lenders reduce, but the future can be incredibly uncertain for the partnership and your family.
In contrast to many other practice areas of law, laws surrounding farming partnerships still rely on largely outdated legislation from the Partnership Act 1890, that fail to consider many of the complexities surrounding modern farming.
If you are part of a farming partnership or planning to enter one, speak to our team of specialist solicitors today for support with a farm partnership agreement tailored to both you and your business.