Farming partnerships: getting it right

Keeping it in the family

A traditional farming partnership is more than a business; in many cases, it is also a family affair. There are benefits to “keeping it in the family” but there is also plenty of scope for misunderstandings and disagreements to arise. These often come to a head or are exacerbated by inevitable life events such as any one of the partners retiring, marrying, divorcing, having children, becoming ill and even dying.

It is not uncommon for farming families to farm without a written partnership agreement hoping that “blood is thicker than water”. Our experience is that this is risky. Any farming partnership, no matter how small, should have a professionally-drafted agreement setting out key provisions such as how the business should be managed, how a partner may retire, what processes should be followed in a dispute and how the business can be brought to an end, if necessary.

In most cases, a well-drafted agreement will head off a dispute at the pass; in others it will dramatically reduce the time and money spent resolving the issue. In the absence of an agreement the out-dated and inflexible legislative provisions of the Partnership Act 1890 will apply. Needless to say, this is not ideal.

If your farming business does not have a partnership agreement then the partners should sit down together and agree the Heads of Terms that need to be documented, before instructing solicitors to draw up an agreement.

Regardless of whether you have an agreement or not, timely legal advice is likely to achieve a swift and sensible resolution of any dispute and may even help to salvage your business.

If you would like to discuss any of the above in further detail, or provide your comments in this regard, please do not hesitate to contact a member of our team.