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Partnership deed

The agreement creating a partnership may be implied or expressed. However, to avoid future disputes, it is always better to have the agreement in writing. Such an agreement in writing is called a ‘partnership deed’.
  • A partnership deed is a document which contains the terms and conditions of the partnership
  • It can be written in any form and it should be signed by each partner personally or through their agent
  • The partnership deed should also be stamped properly, as per the Stamp Act of 1889
  • If the firm is registered, the deed must be registered with the Registrar of Firms
  • The deed may be modified or altered from time to time with the consent of all the partners

The partnership deed usually contains the following particulars

  • Name of the firm
  • Name of the partners
  • Nature and place of business of the firm
  • Date of commencement of the partnership firm
  • Duration of the firm
  • Amount of capital to be contributed by the partners
  • Rules regarding the operation of accounts
  • Ratio in which profits and losses are to be shared
  • Rules relating to the admission, retirement or expulsion of partners
  • Salaries of partners, if any
  • Mode of dissolution of the firm
  • Settlement of accounts on the dissolution of the firm etc.

Need for partnership deed

A partnership deed is required to avoid future disputes between the partners. It is prepared only with the object of resolving the mutual differences among partners.
If the firm applies for its registration to the Registrar of Firms, a copy of the partnership deed is also to be sent with the other information. The partnership so registered is more authentic and also valid in the court. The court accepts the terms and conditions as contained in the deed while settling the matters/disputes between the partners.

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