Question

What are the contents of the Partnership Deed?

Answer 1

1. Name: Name of the Firm.
2. Nature of Business: Nature of the proposed business to be carried on by the partners.
3. Duration of Partnership: Duration of the partnership business whether it is to be run for a fixed period of time or whether it is to be dissolved after completing a particular venture.
4. Capital Contribution: The capital is to be contributed by the partners. It must be remembered that capital contribution is not necessary to become a partner for, one contributes his organizing power, business acumen, managerial skill, etc., instead of capital.
5. Withdrawal from the Firm: The amount that can be withdrawn from the firm by each partner.
6. Profit/Loss Sharing: The ratio in which the profits or losses are to be shared. If the profit sharing ratio is not specified in the deed, all the partners must share the profits and bear the losses equally.
7. Interest on Capital: Whether any interest is to be allowed on capital and if so. the rate of interest.
8. Rate of Interest on Drawing: Rate of interest on drawings, if any.
9. A loan from Partners: Whether loans can be accepted from the partners and if so the rate of interest payable thereon.
10. Account Keeping: Maintenance of accounts and audit.
11. Salary and Commission to Partners: Amount of salary or commission payable to partners for their services. (Unless this is specifically provided, no partner is entitled to any salary).
12. Retirement: Matters relating to the retirement of a partner. The arrangement to be made for paying out the amount due to a retired or deceased partner must also be stated.
13. Goodwill Valuation: Method of valuing goodwill on the admission, death, or retirement of a partner.
14. Distribution of Responsibility: Distribution of managerial responsibilities. The work that is entrusted to each partner is better stated in the deed itself.
15. Dissolution Procedure: Procedure for dissolution of the firm and the mode of settlement of accounts thereafter.
16. Arbitration of Dispute: Arbitration in case of disputes among partners. The deed should provide the method for settling disputes or differences of opinion. This clause will avoid costly litigations.