Is Your Farming Partnership Built on Solid Ground?

Farming partnerships are the backbone of family agriculture in the UK. They allow land, labour and capital to be pooled across generations, enabling farms to grow and thrive in ways that individual ownership often cannot. But while the handshake deal and the shared cup of tea at the kitchen table may feel like a perfectly adequate foundation for a partnership that has run for decades, the legal reality can be very different and the consequences of getting it wrong can be devastating.

At Crombie Wilkinson Solicitors, we work with farming families across North Yorkshire and beyond, and one of the most common issues we encounter is partnerships operating without a written agreement, or with one that is seriously out of date. In an industry where the assets at stake; Land, property, machinery, livestock and farming tenancies, can be worth millions, that is a risk no family should take.

What happens without a written agreement?

If your farming partnership has no written agreement, or your agreement is silent on a key issue, the law will fill the gap for you, specifically, the Partnership Act 1890. This Victorian legislation takes a blunt approach: profits and losses are shared equally between partners, regardless of who owns the land, who does the work, or who contributed the most capital. For most farming families, that will bear little resemblance to what was actually intended.

The same issue arises when a partner retires or passes away. A recent Court of Appeal case, Procter v Procter 2024, demonstrated just how costly the absence of clear retirement provisions can be. In that case, a family farming partnership had a written agreement, but it said nothing about what would happen when a partner left. The result was costly litigation to determine the retiring partner's entitlement. The court confirmed that a retiring partner retains the value of their share in the partnership assets at the date of retirement, assessed at market value rather than book value, a distinction that can mean a very significant difference in practice and cost the family farm millions to settle.

What should a good partnership agreement cover?

A well-drafted farming partnership agreement will address the full lifecycle of the business, not just its day-to-day running. That means being clear about how profits and losses are divided, whether equally, in proportion to capital contributions, or through a more bespoke arrangement that reflects each partner's role and responsibilities. It should also cover capital accounts and drawings, decision-making authority, what happens when a new partner joins, and crucially, the exit arrangements when a partner retires, dies or wishes to leave.

On the question of land ownership, it is essential the agreement is clear about which assets belong to individual partners personally and which belong to the partnership. Farmland owned by one family member but farmed by the partnership without any formal arrangement can create serious complications, particularly on death, where inheritance tax considerations and succession planning are in play.

Don't put it off

One reason farming families often delay getting proper legal advice is that raising these issues can feel awkward as if planning for disputes is somehow a sign of distrust. In our experience, the opposite is true. A clear, written agreement actually strengthens family relationships by removing ambiguity and ensuring everyone understands exactly where they stand. Having these conversations early, with professional support, is far less painful than having them in front of a judge.

Farming partnerships carry unique complexities; tenancy agreements, succession to agricultural property, and the interplay between partnership assets and individual estates. These deserve tailored legal advice, not a standard template.

If your partnership agreement hasn't been reviewed recently or doesn't exist at all now is the time to act. After all, in the case of family farms, prevention is better than cure. Contact a member of our Agricultural Law team for advice.