The operation of business refers to the activities that are involved in the typical day-to-day functions of the business that occur in order to make profits. As you can imagine, when a partner falls out of a partnership, either voluntarily or otherwise, it is important to make sure that that person has no more influence over the business and the general decision-making processes that he or she may have previously been a part of.

A Partnership Deed of Dissolution can achieve this aim through the inclusion of a clause entitled ‘Operation of Business’. Business lawyers who have experience in company law will normally draft these clauses.

What kind of provisions should your business lawyer include?

  • The first provision should explain that from the Termination date, the departing partner will cease to have any remaining interests in the company. These business interests include, but are not limited to the following:

o   All business assets (such as the Website etc);

o   Any intellectual property rights;

o   Any profits and losses of the business

  • In terms of debts in the business, the departing partner will be released from any debts currently held in the business. This means that the remaining partners are agreeing to take over the remaining debts of the business and agree to assume all responsibility for operating the business from the termination date.
  • Depending on how many partners are in the Partnership, your business lawyer might need to draft a provision into the Partnership Deed of Dissolution that requires the remaining partner(s) to update the existing ABN of the business and other related bodies as appropriate and register the business under the remaining partners’ name.
  • Finally, your business lawyer should include a provision that indemnifies the departing partner from any debts to which he or she may be a signatory or account holder or otherwise. This will ensure that all ties are severed between the departing partner and the partnership.

What about the business’ bank account?

For obvious reasons, a partner that is leaving a partnership will not want to remain associated with any business activities, such as the business’ bank account. If the bank account is under the name of the departing partner, your business lawyer should draft a provision that requires the remaining partner(s), typically within 7 days of the termination date, to close the business’ current bank account and open a new bank account under the remaining partner(s)’ name(s) with a new ABN.

Since the departing partner is no longer to be associated with the partnership, it is common practice for a business lawyer to draft a financial entitlement to retain all funds in the business’ bank account for the remaining partner(s) on behalf of the business.


If you are a partner in a partnership and do not currently have a Partnership Deed of Dissolution in place, speak with a business lawyer about getting one drafted. It is incredibly important, both personally and for the business, that this type of situation, where one or more partners leave the business, be drafted into a Partnership Deed of Dissolution so that all partners are in agreement as to how the business will operate following the departure of a partner.

If you require a business lawyer to draft a Partnership Deed of Dissolution for you or your partnership, contact LegalVision on 1300 544 755 to speak with one of our qualified business lawyers.

Lachlan McKnight
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