Introduction And Meaning Of Partnership Deed
Partnership deed is an agreement among partners. It is the basis for establishment of partnership firm. It can be oral or written. In most of the countries, written partnership agreement is required to establish partnership firm. It must satisfy all the requirements of a valid contract. If there is no partnership deed, the provisions of Partnership Act apply.
Partnership deed defines terms, conditions, rights, duties, and liabilities of partners. It helps to avoid conflicts, disputes and misunderstanding among partners. Partnership deed is the main document of partnership firm.
Alien enemy, minor, unsound person and company are disqualified to make partnership deed.
Contents Of Partnership Deed
A partnership deed has following contents:
1. Name and address
The partnership deed contains the name and address of firm and partners. The name should not be similar to the name of an existing firm.
2. Nature and objectives
The partnership deed contains the nature of firm's business. The objectives of the firm are also stated.
3. Duration
The partnership deed contains duration of partnership, if any. It can be fixed term or fixed objectives.
4. Capital
4. Capital
The partnership deed contains the amount of capital contributed by each partner.
5. Drawings
The partnership deed contains the amount which can be withdrawn by each partner.
6. Interest
The partnership deed contains the rate of interest payable on capital and drawings of partners.
7. Profit sharing
The partnership deed contains profit and loss sharing ratio among partners.
8. Salary and commission
The partnership deed contains the amount of salary and commission payable to partners.
9. Rights and duties
The partnership deed contains the rights and duties of partners. The liability of partners is specified.
10. Accounts and audit
The partnership deed contains the system for keeping accounts. The provisions for auditing is stated.
11. Admission and retirement
11. Admission and retirement
The partnership deed contains the procedure for admission and retirement of partners.
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12. Death of partner
The partnership deed contains the procedure for calculating the amount and method of payment on the death of a partner.
13. Valuation of goodwill
The partnership deed contains the method for valuation of goodwill
14. Revaluation
The partnership deed contains the procedure for revaluation of assets and liabilities on admission or death of a partner.
15. Dissolution
The partnership deed contains the procedure of dissolution of firm and settlement of final accounts.
16. Arbitration
The partnership deed contains provision for arbitration in case of disputes.
