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Legal structure of your medical practice

A partnership of trusts is not an uncommon structure for the operation of a medical practice. But are you aware that at law there is a rule against self-dealing?

Now consider for a moment the not uncommon structure for the ownership and operation of a medical practice where a company was incorporated (A Co. Pty Ltd) by the medical practitioners, whereas both medical practitioners where the shareholders and directors of this company and each medical practitioner established a trust and each practitioner appointed A Co. Pty Ltd as the trustee of each practitioner’s respective trust. Now as is good practice the practitioners enter into a partnership agreement through their respective trusts with A Co. Pty Ltd executing the agreement in its various capacities as trustee for the respective trusts.

At common law, there must be at least two parties to an agreement. The law provides that a party cannot enter into an agreement with itself, even where that party may be doing so in different capacities. In this circumstance, the partnership agreement would be unenforceable by the parties.

If the scenario above sounds like the structure you have in place for the operation of your medical practice we suggest you contact Mr Michael Beirne ( Barclay Beirne Lawyers ) or Nicky Jardine on 1300 798831 who can review your structure and advise what if any remedial action needs to be undertaken to ensure that your valuable medical practice and your succession planning goals are not compromised.

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