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F E Smith
F E Smith, Advocate
Category: Law
Satisfied Customers: 8547
Experience:  I have been practising for 30 years.
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UK business partnership query (Not LLP, but general

Customer Question

UK business partnership query (Not LLP, but general partnership)
The two partners are currently required to sign documents....ie granting leases, building contracts, end of year accounts etc.
How is it possible to arrange for one partner's signature only to be required, by mutual consent?
Submitted: 2 months ago.
Category: Law
Expert:  Jamie-Law replied 2 months ago.

Hello my name is ***** ***** I will help you with this.

Wont the Landlord sign without both?

Customer: replied 2 months ago.
Hi.
We jointly own a partnership company that is currently building commercial units.
We often need to move quickly.
One partner can be unavailable due to travel and so we would like to have one signatory and not two.
Expert:  Jamie-Law replied 2 months ago.

Is the Landlord refusing though?

Customer: replied 2 months ago.
Irrelevant.
We would be the landlords.
A recent example was granting a lease, with both of us needing to sign.
Also selling a unit, with both needing to sign.
Also annual accounts with both needing to sign.
Expert:  Jamie-Law replied 2 months ago.

Ok. This is a problem. As you are a partnership in order for both to be bound then you both need to sign.

If it was a Limited company then it would be ok, as either or both of you would be able to sign.

But as a partnership in order to bind each other you both need to sign.

This is because if something went wrong and it went to Court the partner could say, nothing to do with me.

However the only way around this is to have an indemnity from the partner to say he is joint and severally liable for all your actions with the business.

That way then he would be jointly liable. So you could do it that way - get a written indemnity

Can I clarify anything for you about this today please?

Customer: replied 2 months ago.
Ok.
Thanks.
Could we do a general power of attorney, to allow the one partner also to sign under Pof A for the other?
How could we word this?
Expert:  Jamie-Law replied 2 months ago.

I cant help you with PoA as I am not specialist in that field. I can only advise on that an indemnity would be needed.
That is that he instructs you to act on his behalf and accepts and any all liability, joint and severally as a result of these decisions.

Does that clarify?

Customer: replied 2 months ago.
please can you explain the written indemnity?
Is that the absent partner giving the indemnity to the present partner that signs or vice versa?
Expert:  Jamie-Law replied 2 months ago.

Yes absent partner giving the indemnity to be bound

Does that clarify?

Customer: replied 2 months ago.
would a power of attorney work?
Expert:  Jamie-Law replied 2 months ago.

It could, but as I have said before I am not a PoA lawyer, so cant advise on the correct form or wording of this.

Customer: replied 2 months ago.
we could have a P of A drafted that would allow the present partner to also sign on behalf of the absent partner?
Could this be valid for the three examples above, so granting a lease, selling a unit?
And how about annual accounts?
What would be the downside of doing it this way?
Could we write in whatever specifics that we wanted?
Expert:  Jamie-Law replied 2 months ago.

Correct. Yes the PoA would be binding.

The accounts, if you are only a partnership only need to be submitted to HMRC.

But in any event only one needs to sign this.

Does that clarify?

Customer: replied 2 months ago.
Ok.
You have provided only minimal information .
You did not suggest a P of A. This was my research, and you have not given me any idea of the downside of using a P of A, which I really need to know about.
Overall I am very disappointed with this service.
Expert:  Jamie-Law replied 2 months ago.

I indicated that I am not a PoA lawyer.

I suggested an indemnity which is my view is the best way forward.

Can I clarify anything else for you?

Expert:  F E Smith replied 2 months ago.

I will try to assist you with this is the other expert has opted out.

There is no reason why this could not be dealt with by way of a general Power of Attorney which either gives the right to do specific things (a particular lease for example) or to do anything within the partnership.

Although legally there is no reason why be done, you may find some banks or building societies or lenders or solicitors or whoever is on the other side of the agreement will accept the Power of Attorney.it is unlikely that HMRC would accept a partner’s signature as an attorney for another partner.

Because of these very general nature of an overall power of attorney, what you might want to do is have specific power of attorney is in respect of matter requiring signature or agreement.

If you are granting a lease for example, the new tenant solicitor may say that a signature by way of power of attorney is not acceptable. So the answer to your question is that a Power of Attorney may work if it’s acceptable to whoever it is on the other side of the transaction.

Can I clarify anything for you?

Please rate the service positive. It’s an important part of the process by which experts get paid.

We can still exchange emails. Best wishes.

FES.

Customer: replied 2 months ago.
Hi.
Thank you for trying to help.
Please can yo re-read sentence three of your your reply as it is not clear, and I am not sure what you mean.
In practice, how would the P of A work if for instance signing a lease with the designated space for the two signatures?Many thanks
Expert:  F E Smith replied 2 months ago.

What I’m getting at is that the Power of Attorney is perfectly legal. However some banks or building societies or other organisations or anyone else whereby you are using the Power of Attorney and probably HMRC would insist on a personal signature regardless of the Power.

In a lease for example, with a 2 signatures, the person signing under the power of attorney would sign, “ Joe Bloggs signature, as attorney for ***** *****.

My firm would not accept a lease signed by one partner in both places under a power of attorney unless the attorney was a solicitor or other professional. However it comes down to whoever you are dealing with as to whether they will accept it .

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