Partnership Deed

While to constitute a partnership there must be an agreement between the parties, it need not necessary between the parties, it need not necessary be in writing. It may be of the most informal character, even oral though the business of partnership may involve lakhs of rupees, or on the other hand, it may be an elaborate written document called the deed of partnership or article of partnership and drafted by a lawyer. Where the partners have decided to enter into a deed of partnership, it should be stamped according to the provisions of the Stamp Act. The partnership deed is not a public document like a Memorandum of Association of a Company and only binds third so far as they have notice of it. A property drawn up deed of partnership should ordinary cover the followings points:-

 

1.  The name of the firm together with the names of the partners composing it.

2.     The nature of business and the duration of partnership.

3. The amount of capital each partner undertakes to co0ntribute and the manner of its contribution.

4.      The ratio for sharing profits and losses.

5.      Salaries, commissions etc, if any, payable to partners and also any drawings which may be allowed.

6.      Interest on partner’s capital loans drawings by partners and interest, if any to be charged on overdrawn accounts.

7.      The division of work among the partners for the management of the firm.

8.      Matters relating to retirement, death and admission of partners and valuation of goodwill and share of profits available to such partners and any restraint on business by a retiring partner.

9.      Settlement of accounts at the dissolution of the firm.

10.  Arbitration clause to settle disputes which may arise among the partners without to a court of law.

11.  Any other clause or clauses which may be found necessary in any particular kind of business.