A partnership deed, also known as a partnership agreement, is a document that outlines in detail the rights and responsibilities of all parties to the agreement . It has the force of law and is designed to guide the partners in the conduct of the business.
A partnership deed is often used for a partnership business, where the exact terms involved in the partnership will likely be very significant to those involved in the agreement.
This is significant because it is possible that at some point in a partnership in business different partners will conflict and, without a deed of partnership, the rules will default to whatever is set forth as per law. Ultimately, in such a case, the different partners of the partnership in business might choose to sue each other in order to have the partnership interpreted in their favor.
A deed of partnership, however, might eliminate the need for all such action.
Partnership is an agreement between persons to carry on a business. The agreement entered into between partners may be either oral or written. When the agreement is in written form, it is called ‘Partnership Deed.’It must be duly signed by the partners, stamped and registered. Any alteration in partnership deed can be made with the mutual consent of all the partners.It generally contains-Name of the firm, Nature of the business, Names of partners, Place of the business, Amount of capital to be contributed by each partner, Profit sharing ratio between the partners, Amount of salary and commission payable to the partners, Duties, powers and obligations of partners,Mode of valuation of goodwill in the event of admission, retirement and death of a partner, Settlement of accounts in the case of dissolution of the firm, Arbitration in case of disputes among the partners, Arrangements in case a partner becomes insolvent, etc.