Content of partnership deed
Definition (Article#4)
"Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
Who is Partner?
Persons who have entered into partnership with one another are individually called 'partners'. A partner has the legal status of a person.
What is Firm?
Persons who have entered into partnership with one another are collectively called 'firm'. As far as the legal status of a firm is concerned, it is neither a person nor a legal entity. It has no existence apart from its members. A firm carries a business under some name, it is called 'firm name'.
What is partnership deed?
An agreement through which the partnership is form is calles partnership deed.
Content of partnership deed
In the Partnership Deed, clauses covering the following:
1. The name of the firm and the nature and location of the partnership business.
2. The commencement and duration of the partnership.
3. The amount of capital to be contributed by each partner.
4. The rate of interest to be allowed to each partner on his capital and on his loan to the firm, and that to be charged on his drawings.
5. The disposal of profits, particularly the ratio in which the profits are to be shared by the partners.
6. The amount to be allowed to each partner as drawings and the timing of such drawings.
7. Whether a partner will be allowed a salary.
8. Any variations in the usual rights and duties of partners.
9. The method by which goodwill is to be calculated on the retirement or death of a partner.
10. The procedure by which a partner may retire and the method of payment of his dues to him.
11. The basis of determination of the sums due to the executors of a deceased partner and the method of payment.
12. The treatment of losses arising out of the insolvency of a partner.
13. The procedure to be followed for settlement of disputes among partners.
14. Preparation of accounts and their audit.
The Deed has to be properly stamped.
Often there is no Partnership Deed or, even if there is one, it may be silent on a particular point. If on any point, the Partnership Deed contains a clause, it will hold good; otherwise the provisions of the Partnership Act relating to the question will apply.
