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Partnership Deed

Partnership deed is a type of legal agreement between two or more people to start a business. The terms and conditions to run the organization must be mentioned in the Partnership Agreement. It specifies various terms such as profit and loss sharing, salary, interest on capital, drawings, admission of a new partner, etc. to bring clarity to the partners. The Partnership deed created by the partners should be on a stamp paper under the Indian Stamp Act and each partner should have a copy of the partnership deed. A copy of the Partnership deed should also be filed with the registrar of firms in case the firm is being registered. It is necessary to notarise a partnership deed but it is best if it is registered before the magistrate. Notarization and registration lend legality to the deed without which the partnership will just be an agreement without enforceability.

In order to understand the partnership deed, the buyer as well as the owner should acknowledge the existence of the particular deed. During the commencement of business deal which is also accompanied with two partners or more than two partners, they should map their shares of profits and losses into a written contract which is also known as partnership deed.

The coordinated effort of the business partners concurred by the partnership deed is known as partnership company.

Crucial Elements of Partnership Deed

Company name and address,

Name and address of the partners,

Type of the business,

Ownership percentage,

Contribution of partners,

Profit sharing percentage,

Capital & interests,

Salary and compensation,

Date of incorporation,

Duration of Organization,

Terms and Conditions of Retirement,

Accounts Audit Procedures,

Dispute Settlement Measures;


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Importance of Partnership Deed

When partners have a partnership deed it helps with the legal responsibilities towards the firm. Partnership deeds do not require any registration and the same can be used.

Benefits of a well contracted partnership deed:

It adjusts the privileges, duties, and responsibilities of all partners and balances the same.

It helps in settlement of the disputes between the associates by referring to the points mentioned in the deed.

It clears uncertainties in terms of profits losses in ratio between partners.

It decides the exact job roles and each partner have their clear set of tasks.

Partnership deed contains articles that simplify the remuneration to partners and the interests for partners who invested capital in business.

It is advisable to have a well-drafted partnership deed in such case.


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