It is important for a partnership to clearly state which of their assets are partnership property and what is the personal property of one or more of the partners. This is important for a number of reasons, including having an effect on the rights of creditors of the partnership and creditors of the partners individually.
The starting point for this issue is the general definition of “partnership property”, which was set out in the Partnership Act 1890. Part of the Act states that “All [assets] originally brought into the partnership stock or acquired… on account of the firm or for the purposes of the partnership business, are called in this Act partnership property.”
In the absence of any agreement to the contrary, the default rule is that property bought with partnership money is deemed to be partnership property.
To prevent disputes or confusion about ownership of property, it is advised that clear partnership property guidelines are provided as part of a Partnership Agreement prior to the formation of the partnership.