What is Partnership Deed
Partnership can be defined as association of at least two or more than two persons for the purpose of carry on any business activity for the purpose of earning profit or welfare of society. So it is concluded that partnership is an agreement between partners. The agreement can be either in oral or in written form. However it is found that written agreements are more preferable as it helps to avoid disputes among partners in future. The written agreement is in the form of partnership deed which act as an evidence for conditions on which partnership is based upon and signed by partners and witness at the time of its formation.
Now let us discuss the main clauses which are explained under partnership deed with all the important facts which needs to be discussed. Following are the points which show the important clauses to be considered under partnership deed:-
Firstly there is needed to be discussing about the partners in whom partnership agreement is taking place. Information about their names, addresses etc is given under this clause. This clause also shows that the partnership is based upon mutual trust and confidence among partners. Secondly there is needed to be discuss about the business. There is need to mention the name, type and also the time (if any fixed) about the business. The partnership is meant for carry on the business which is mentioned under partnership deed. The third clause shows the profit sharing ratio among partners either it can equal or not as it is shown under this clause. The next clause shows, is there any interest on capital allowed to partners. If allowed at which rate it should be allowed. Interest on capital should be charge against profit or it is only allowed when there are appropriate profits. All these points are discussed under this clause of partnership deed. A clause should also be made which shows the mode of payment on retirement of a partner. If payment is not made instantly after retirement how much rate of interest must be given on delay of payment. In case of death of partner how much compensation is to be given to his family and up to what time this decisions also needs to be made under the deed.
The clause shows that reconstitution of partnership can only be done with the mutual consent of all partners and the partnership in the absence of any clause would follow the implied rules of partnership act.