What is a Partnership Deed? A Guide for Business Partners
A Partnership Deed is a written agreement between business partners that outlines roles, responsibilities, profit-sharing, and dispute resolution terms. It provides a legal foundation for running a partnership firm smoothly.
Understanding the Importance of a Partnership Deed
A Partnership Deed acts as the governing document for any partnership business. It clarifies key aspects such as capital contribution, profit and loss sharing ratios, decision-making authority, and exit procedures. While verbal partnerships exist, a written deed is essential to avoid misunderstandings and resolve conflicts legally.
Clear terms in a Partnership Deed build trust and prevent future disputes.
What Should Be Included in a Partnership Deed?
An ideal Partnership Deed includes the name and nature of the business, names and addresses of partners, their capital contributions, roles and responsibilities, and rules for retirement, death, or dispute. It may also cover banking arrangements, salary or interest payments, and methods for settling accounts.
This video explains how to draft a partnership deed and why it's legally and financially important for entrepreneurs and small businesses.
Checklist Before Executing a Partnership Deed
Use proper legal language and format approved under the Partnership Act.
Ensure all partner names, capital amounts, and roles are accurate.
Get the deed printed on appropriate stamp paper and notarized.
All partners must sign in the presence of witnesses.