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Partnerships

AB

This publication guides practitioners in Alberta through the creation, management, and dissolution of partnerships.

2 Matter Plans

Overview

The commentary covers key aspects of partnerships, including partnership structures, formation, privacy, and liability. It also offers further guidance on flexibility, income and taxation, participant arrangements, raising capital, and decision-making.

The Reference materials folder includes guidance on electronic signing and remote witnessing, and the Getting the matter underway folder contains essential compliance and client engagement documents. The comprehensive Retainer Instructions ensure that all necessary information is gathered from the client at the outset of the matter.

The Business structures and the comparative table guide provides a comparison of the pros and cons of different business structures.

Precedents in this publication include:

  • Library of clauses for partnership agreements;
  • Agreements and deeds for:
    • Partnerships;
    • Limited partnerships;
    • Buy and sell options;
    • Assignment;
    • Dissolution;
  • Buy and sell funding arrangement explanations.
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2 Matter Plans Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Partnerships (AB)
  • Folder icon Reference materials
    • Item icon AI Prompts
    • Item icon Electronic Signing and Remote Witnessing
    • Item icon Business Structures and the Comparative Table (AB)
    • Item icon Further information
      Other trusted and useful resources

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  • Item icon Overview
    A partnership is a common form of business organization. It involves two or more persons, including corporations and individuals, carrying on business in common with a view to profit: s 1 of the Partnership Act, RSA 2000, c P-3. The relationship is contractual and good faith is an essential ...

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Partnerships
    • Item icon To do list - Partnerships
    • Item icon First steps
    • Item icon Client details, verification, and source of funds
    • Item icon Retainer instructions - Partnerships
    • Item icon Conflict of interest check
    • Item icon Initial letter to client enclosing retainer agreement
    • Item icon Retainer agreement - Alberta
    • Item icon Scope of work - Partnerships
    • Item icon Time and costs estimates
    • Folder icon If required - Costs disclosure update and a non-engagement letter
      • Item icon Letter to client updating costs disclosure
      • Item icon Non-engagement letter
    • Folder icon General deeds, agreements, execution clauses, and statutory declarations
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Confidentiality deed
        • Item icon Deed for general use
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon General deed of indemnity
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements and contracts
        • Item icon Execution clauses - Deeds
      • Folder icon Statutory declaration
        • Item icon Statutory declaration
      • Item icon Standard annexure note for documents
  • Folder icon B. Establishing a partnership
    • Item icon Partnership structures
      There are three types of partnerships:

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    • Item icon Summary of the process of creating a partnership
      Establishing a partnership is a relatively simple process:

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    • Item icon Statutory powers, rights and responsibilities of partners
      All partners are regarded as agents of one another and owe one another a duty of utmost good faith. Partners are expected to conduct themselves in business relations for the mutual advantage of the other partners, and to avoid conflicts between their interests and their obligations and duties as a ...

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    • Item icon The partnership agreement
      It is not essential to have a formal written agreement for a partnership to exist, and the agreement between partners can be oral or implied. However, a limited liability partnership can only be established by the express agreement of the partners. A well-drafted partnership agreement is considered ...

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    • Item icon Partnership agreement
    • Item icon Limited partnership agreement
    • Item icon Letter to client with draft partnership agreement
    • Folder icon Library of clauses for partnership agreements
      • Item icon Representative clause for a corporate partner
      • Item icon One partner to have sole management
      • Item icon Termination of partnership
      • Item icon Notice of determination of partnership
      • Item icon Expulsion clause
    • Item icon Buy and sell agreements
      Buy and sell clauses or agreements and other variations such as a put and call option, pre-emptive rights clause, or right of first refusal clause are commonly included in a partnership agreement. They can also be a separate document incorporated into a partnership agreement. In a buy and sell ...

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    • Item icon Buy and sell option agreement
    • Item icon Enclosure - Buy and sell agreements funding arrangements explanation
    • Item icon Buy and sell option - Funding agreement
    • Item icon Policy register
    • Item icon Register a business name
    • Item icon Special Authority to Execute a Declaration or Registration
    • Item icon Declaration of Partnership
    • Item icon Certificate or Application for Alberta or Extra-Provincial Limited Partnership
    • Item icon Application for Alberta or Extra-Provincial Limited Liability Partnership
  • Folder icon C. Running a partnership
    • Item icon Partnership property
      A partnership does not have a separate legal personality from its partners and is incapable of holding property in its name. Partnership property is held in the name of the general partners for the benefit of the partnership. All property, rights, and interests in property initially brought into or ...

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    • Item icon Apportionment of liability
      Generally, each partner is jointly and severally liable to the full extent of their personal assets for all the partnership’s debts and obligations. After death, a partner’s estate is also severally liable for debts and obligations to the extent they remain unpaid. There are exceptions to this ...

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    • Item icon Taxation
      Income Tax Partnerships do not pay tax. Income and losses flow through to the partners, who include these in their income tax returns. They pay tax based on their aggregate income at their marginal income tax rate if the partner is an individual, or the corporate tax rate if the partner is a ...

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    • Folder icon If required - Deed of variation and amendment
      • Item icon Deed of variation of partnership - Profit share
      • Item icon Amendment to Declaration of Partnership
      • Item icon Notice to Amend Certificate for Alberta or Extra-Provincial Limited Partnership
      • Item icon Notice to Amend Alberta or Extra-Provincial Limited Liability Partnership
    • Folder icon Library of precedents for small business
      • Item icon Agreement for supply of goods and services
      • Item icon Credit application
      • Item icon Dispatch and delivery policy
      • Item icon Director guarantee deed
      • Item icon Liability waiver and consent
      • Item icon Privacy policy
      • Item icon Returns and refund policy
      • Item icon Terms of trade
      • Item icon Website terms of use for advertising and booking personal services
      • Item icon Website terms of use for downloadable online products
      • Item icon Website terms of use for physical products
    • Item icon Annual Report for Limited Liability Partnership
  • Folder icon D. Dispute resolution
    • Item icon Mediation
      Mediation has cost and time saving advantages and can be particularly useful for partnerships that are small with limited financial resources. An impartial and independent third party is appointed by agreement, or by a mechanism in the partnership agreement, to work with both parties together or ...

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    • Item icon Litigation
      Litigation involves the parties to a dispute asking the court to determine the outcome. The decision of the court is binding on the parties and enforceable. Litigation is the most expensive and time-consuming method of dispute resolution. Litigation’s stressful and adversarial nature often means ...

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    • Item icon Letter to other partners giving notice of partnership dispute and referral to mediation
    • Item icon Letter to other partners giving notice of expulsion from partnership
  • Folder icon E. Dissolution of the partnership
    • Item icon Dissolution of the partnership
      Partnerships are not separate legal entities. Therefore, any change in the partner’s ownership brings the partnership to an end by dissolving it, unless the partnership agreement provides otherwise. Several events trigger the dissolution of a partnership, or give rise to a right to seek a court ...

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    • Item icon Involuntary dissolution
      General partner A general partner’s death, retirement, or incapacity results in the involuntary dissolution of a partnership unless otherwise provided in the partnership agreement.

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    • Item icon Voluntary dissolution
      The general partners can agree when forming the partnership that the partnership is for a fixed period or a specific undertaking. This means the partnership dissolves once the fixed term has elapsed or the undertaking is completed or abandoned. Additionally, all the partners may agree to dissolve ...

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    • Item icon Court-ordered dissolution
      A partner, including a limited partner, may apply for a court order to dissolve a partnership in the following situations:

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    • Item icon Letter to other partners giving notice of meeting of partners
    • Item icon Minutes of meeting
    • Folder icon Library of notices
      • Item icon Letter to other partners giving - Notice of intention to dissolve the partnership
      • Item icon Letter to other partners giving notice of retirement of partner
      • Item icon Letter to other partners with notice of intention to dissolve partnership with no previous partnership agreement
    • Item icon Deed of dissolution
      The terms of the dissolution incorporated in a deed of dissolution cover the following issues:

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    • Item icon Deed of dissolution
    • Item icon Declaration of Dissolution of Partnership
    • Item icon Notice to Cancel Alberta or Extra-Provincial Limited Partnership
    • Item icon Notice to Cancel Alberta or Extra-Provincial Limited Liability Partnership
    • Folder icon If required - Notice of partnership dissolution or partner retirement
      • Item icon The Alberta Gazette
      • Item icon Example content - Request to publish in the gazette - Dissolution
      • Item icon Letter to third party giving notice of dissolution of the partnership
    • Item icon Settling accounts on dissolution
      See s 48 for settling the accounts of a partnership, including how losses are paid. Once the losses are paid, the partners are paid the remainder in proportion to their partnership share.

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  • Folder icon F. Post dissolution - Continuation of the business and reconstitution
    • Item icon Continuation of the business post dissolution
      The dissolution of a partnership does not technically result in the termination of the partnership’s business activities. It means the partners no longer intend to be associated with one another in the business. A partnership must wind up to terminate its business activities. In the alternative, ...

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    • Item icon Reconstitution and adding new partners
      Instead of winding up a partnership on a dissolution triggering event, the remaining partners may reconstitute the partnership by buying out the retiring partner. The right of the remaining partners to continue a partnership on a partner's death, retirement, or bankruptcy depends on the partnership ...

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    • Item icon Deed of assignment of interest in partnership
    • Item icon Letter to other partners giving notice of admission of new partner
    • Item icon Agreement for admission of incoming partner
    • Item icon Letter to client with draft agreement
  • Folder icon G. Finalizing the matter
    • Item icon Finalizing the matter
      It can be useful to foster these professional relationships. Business clients often require ongoing legal advice and support. By establishing a strong working relationship with them, lawyers can develop a loyal client base. Working with such clients can also expose the firm to a wide range of ...

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    • Item icon Letter to client finalizing the matter
    • Item icon Invoice recital - Partnerships
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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