Partnership Agreement or Partnership Deed Online Study, best article on partnership deed in business and accounts study, online books about business and management study, students can read best topic on business management study online 2024.Â
In a partnership firm, there is a collective and separate responsibility of partners. The acts of the partners in usual course of business bind the firm. If the partners work with understanding and co-operation, then the partners will work smoothly. If there is a suspicion among them, then conflicts among partners are bound to be there.
The past experience of partnership firms shows that there are disputes among partners over many things and this results in the closure of the firm. If the areas of dispute, conflict or suspicion are spotted earlier and a clear understanding is reached, then the homes can run smoothly, So, partnership agreement or deed is a document which is prepared to explain important points so that the chances of conflict are minimized. Even if there is a dispute later on, then partnership deed helps in its easier settlement.
Partnership Deed Meaning
Partnership deed forms the basis of partnership. It includes all important clauses like name of business, contribution of capital, sharing of profits, mode of management, etc. “Partnership deed is a document containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct and management of the affairs of the firm are determined.” The deed must be signed by the partners.
The partnership deed can both be oral or in writing. In France and Italy, a written agreement among partners is essential to bind them lawfully. In India, U.S.A. and Britain, the agreement may be either oral or in writing. A written agreement, however, should be preferred because nobody can dispute the contents. There may be a dispute even about what was agreed if the contents are not in writing. So, written deed should be preferred.
Contents :Â Partnership Agreement or Partnership Deed
Some of the important clauses to be included in a partnership deed are:
1. The name of the firm;
2. Names and addresses of partners;
3. Nature of business proposed to be carried on by the firm;
4. The total amount of capital and contributions by each partner;
5. The extent to which partners are to take part in the management of the business;
6. Amount of withdrawals to be allowed to each partner;
7. The profit sharing ratio;
8. The amount of salary or commission payable to any partner for the services rendered to the business;
9. Rate of interest to be allowed on capital as well as rate of interest to be charged on drawings:
10. Division of power and duties among partners
11. The method of evaluating goodwill at the time of admitting a new partner or at the time of retirement or death of a partner;
12. Procedure for dissolution of the firm and settlement of accounts ;
13. Maintenance of books of account and audit of accounts ; and
14. Arbitration clause for settlement of disputes among the partners.
This is not exhaustive and final list of closes which can be inserted in the partnership deed Any clause morally agreed to by the partners can be made a part of partnership deed. If the partnership deed is silent on some point, these prevision of de partnership act will apply.
If the partnership deed is silent shout the distribution of profits, then all the partners wit equal share of profits and losses. If the rate of interest on person, should be taken at the rate of 6% pa.
