Important points that a Partnership Deed should cover are given below:
The document in which the respective rights and obligations of the members of a partnership are set forth is called a ‘partnership deed’. It should be drafted with care and be signed by all the partners. It must be stamped in accordance with the Indian Stamp Act.
Each partner should have a copy of the Deed. The firm should be registered and copy of the Deed should be filed at the time of registration with the Registrar of Firms because in the absence of such registration partners cannot enforce the conditions laid down in the Deed through a court of law.
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ADVERTISEMENTS:
The Deed should cover the following points:
(i) The name of the firm and the names and addresses of partners who compose it.
(ii) Nature of business and the town and place where it will be carried on.
ADVERTISEMENTS:
(iii) Date of commencement of partnership.
(iv) The duration of partnership.
(v) The amount of capital to be contributed by each partner and the methods of raising finance in future if so required.
(vi) The ratio of sharing profits and losses.
ADVERTISEMENTS:
(vii) Interest on partners’ capital, partners’ loan, and interest, if any, to be charged on drawings.
(viii) Salaries, commissions etc., if any, payable to partners.
(ix) The method of preparing accounts and arrangement for audit and safe custody of cash etc.
(x) Division of task and responsibility, i.e., the duties, powers and obligations of all the partners.
(xi)Rules to be followed in case of retirement, death and admission of a partner.
(xii) Expulsion of partners in case of gross breach of duty or fraud.
(xiii) Can a partner carry on a competing business or any other business whether competing or not. Section 11 (2) clearly provides that the Deed may provide that a partner shall not carry on any business other than that of the firm while he is partner, notwithstanding anything contained in Section 27 of the Indian Contract Act where agreements in restraint of trade are void.
(xiv) The circumstances under which the partnership will stand dissolved.
(xv) Arbitration in case of dispute among the partners.
The terms laid down in the Deed may be varied by consent of all the partners, and such consent may be expressed or may be implied by a course of dealing [Sec. 11(1)].