What is a Partnership Deed?
Partnership deed is a partnership agreement between the partners of the firm which outlines
the terms and conditions of the partnership between the partners. The purpose of a partnership
deed is to provide clear understanding of the roles of each partner, which ensures smooth
running of the operations of the firm.
The Partnership comes into the limelight when:
There is an outcome of agreement among the partners.
The agreement can be either in written or oral form.
The Partnership Act does not demand that the agreement has to be in writing.
Wherever it is in the form of writing, the document, which comprises terms of the
agreement is called ‘Partnership Deed.’
It usually comprises the attributes about all the characteristics influencing the association
between the partners counting the aim of trade, the contribution of capital by each partner, the
ratio in which the gains and losses will be divided by the partners and privilege and
entitlement of partners to interest on loan, interest on capital, etc.
Registration of Partnership Deed:
All the rights and responsibilities of each member are recorded in a document known as a
Partnership Deed. This deed can be oral or written; however, an oral agreement is of no use
when the firm has to deal with tax. A few essential characteristics of a partnership deed are:
The name of the firm.
Name and addresses of the partners.
Nature of the business.
The term or duration of the partnership.
The amount of capital to be contributed by each partner.
The drawings that can be made by each partner.
The interest to be allowed on capital and charged on drawings.
Rights of partners.
Duties of partners.
Remuneration to partners.
The method used for calculating goodwill.
Profit and loss sharing ratio
Importance of partnership deed
A few important advantages of a well-drafted deed are listed:
It controls and monitors the rights, responsibilities and liabilities of all the partners
Avoids dispute between the partners.
Avoids confusion on profit and loss distribution ratio among the partners.
Individual partner’s responsibilities are mentioned clearly.
Partnership deed also defines a remuneration or salary of the partners and working
partners. However, interest is paid to each partner who has invested capital in the
business.
PARTNERSHIP DEED
THIS DEED OF PARTNERSHIP is made on this [Date], by and between:
PARTIES:
Name of Partner 1, residing at [Address of Partner 1],
Name of Partner 2, residing at [Address of Partner 2],
Name of Partner 3, residing at [Address of Partner 3],
HEREINAFTER REFERRED TO COLLECTIVELY AS "THE PARTNERS."
WHEREAS, the Partners desire to form a partnership for the purpose of [Describe the
Business Purpose], and have agreed to enter into this Deed of Partnership to regulate their
mutual rights, duties, and obligations.
NOW, THEREFORE, THIS DEED WITNESSETH:
1. NAME AND PLACE OF BUSINESS: The name of the partnership shall be [Name of the
Partnership Firm], and its principal place of business shall be at [Address].
2. BUSINESS PURPOSE: The partnership shall engage in the business of [Describe the
Nature of Business], and any other business that the Partners may agree upon in writing.
3. CAPITAL CONTRIBUTION: Each Partner shall contribute the following amounts as
capital to the partnership:
Name of Partner 1: Rs. [Amount]
Name of Partner 2: Rs. [Amount]
Name of Partner 3: Rs. [Amount]
4. PROFIT AND LOSS SHARING: Profits and losses of the partnership shall be shared
among the Partners in the following manner:
5. MANAGEMENT AND DECISION MAKING: The Partners shall manage the business
jointly and shall make decisions by unanimous consent. In the event of a disagreement, the
matter shall be resolved through mediation or arbitration, as agreed upon by the Partners.
6. DRAWINGS: Each Partner may withdraw from the partnership, from time to time, such
sums as may be agreed upon, provided that the Partner's capital account is not thereby
reduced below their original contribution.
7. DISSOLUTION: In the event of the dissolution of the partnership, the assets of the
partnership shall be liquidated, and the proceeds shall be distributed among the Partners in
proportion to their capital contributions.
8. GOVERNING LAW: This Deed of Partnership shall be governed by and construed in
accordance with the laws of [Jurisdiction].
IN WITNESS WHEREOF, the Partners hereto have executed this Deed of Partnership on the
date first above written.
[Signature of Partner 1]
[Signature of Partner 2]
[Signature of Partner 3]
WITNESSES:
[Signature and Name of Witness 1]
[Signature and Name of Witness 2]
