The simple partnership is the most elementary form of association in Swiss company law. Governed by arts. 530 to 551 CO, it is formed when two or more persons unite to achieve a common purpose with common resources, without creating a separate legal person. It is frequently used for real estate projects in co-ownership, construction consortia, joint ventures, or informal associations of self-employed persons. PBM Avocats in Geneva and Lausanne intervenes in drafting simple partnership agreements and in disputes between partners.
Characteristics of the Simple Partnership
| Characteristic | Rule | Legal Basis |
|---|---|---|
| Legal personality | None — the partnership is not a legal person | Art. 530 CO |
| Registration | No commercial register entry | Art. 552 CO a contrario |
| Formation | No formalities — verbal or implied agreement is sufficient | Art. 530 CO |
| Partners' liability | Joint and several towards third parties | Art. 544 para. 3 CO |
| Management | All partners unless otherwise agreed | Art. 535 CO |
| Profit/loss sharing | In proportion to contributions unless otherwise agreed | Art. 533 CO |
Key Clauses of a Simple Partnership Agreement
- Common purpose: precise description of the project or activity
- Contributions: capital, services, know-how of each partner
- Management: who makes ordinary and extraordinary decisions?
- Profit and loss sharing: proportions of each partner
- Duration: indefinite or linked to a project
- Exit clauses: conditions for a partner's departure or death
- Non-compete clause: during and after the partnership
- Dispute resolution: arbitration or ordinary courts
Practical Uses of the Simple Partnership
The simple partnership is particularly used in:
- Real estate co-ownership: two or more persons buying a property together without creating a company
- Construction consortia: grouping of companies to respond to a tender
- Joint ventures: temporary partnership between companies for a specific project
- Liberal professions: informal association of doctors, lawyers or architects sharing costs
- Agricultural partnerships: grouping of farmers for joint cultivation
When is a simple partnership formed under Swiss law?
A simple partnership (art. 530 CO) is formed when two or more persons agree to combine their contributions and efforts to achieve a common goal. No formality is required for its formation — even a verbal agreement or implied conduct is sufficient. Common situations include real estate co-ownership projects, construction consortia, joint ventures between companies, and informal associations of self-employed persons. The absence of legal personality means the partnership does not register in the commercial register.
Are the partners jointly and severally liable for the partnership's debts?
In principle, each partner is jointly and severally liable for the debts of the simple partnership towards third parties (art. 544 para. 3 CO). This means a creditor can pursue any partner for the full amount of the debt. This joint and several liability is one of the main risks of the simple partnership and justifies ensuring the agreement is carefully drafted, particularly regarding internal allocation of costs and liability.
How is a simple partnership dissolved?
A simple partnership is dissolved in particular: by achievement of the agreed purpose, by expiry of the agreed term, by mutual agreement of all partners, by death or bankruptcy of a partner (unless the partnership agreement provides for continuation), or by notice of one of the partners (for indefinite partnerships). After dissolution, the partnership's assets are liquidated and the net balance is distributed among the partners in proportion to their contributions.
Can a partner be excluded from the simple partnership?
Swiss law does not expressly provide for exclusion of a partner from a simple partnership. However, in the event of serious breach of the partnership agreement by a partner, the other partners may seek judicial dissolution of the partnership for just cause. Contractually, it is possible to include an exclusion clause that allows partners to exclude a partner who breaches their obligations, under certain conditions.