Elements of Partnership Deed - QS Study
QS Study

Partnership deed is very important for the solution of problems and conflicts of the partnership firm. All relevant matters should be in the deed to be able to solve the future problems. If anything is not mentioned, then the relevant provision of Partnership Act, 1932 will be applicable. The partnership deed should contain the following points:

  • Name and Address of the Firm.
  • Names and Addresses of the Partners.
  • Nature of Business: It should be unanimously decided by the partners what type of business they will be carrying on.
  • Profit Sharing Ratio: Partners must agree as to the ratio in which they will be distributing profit or loss.
  • Capitals of the Partners: The amount of capital to be contributed by each partner and whether the capital accounts will be fluctuating or fixed.
  • Interest on Capital: Whether interest on capital is allowed or not. If allowed then at what rate.
  • Amount of Drawings: How much amount each partner can withdraw for his personal use.
  • Interest on Drawings: Whether interest on drawings will be charged or not. If it will be charged then the rate of interest.
  • Salary: Whether salary or commission will be paid to partners for their services or not, if it will be paid then the amount of it.
  • Loan from Partners: The loan taken by firm from partners and interest payable on it.
  • Bank Accounts: The bank where accounts are to be opened, the names of partners empowered to make withdrawals and sign the cheques.
  • Books of Accounts: The method of book keeping and accounts, date on which final accounts of the firm will be prepared.
  • Date of Commencement of Partnership.
  • Duration of Partnership: The period for which the partnership has been established and the mode of dissolution of partnership.
  • Rules to be followed in case of Admission of a Partner.
  • Rules of Retirement: The notice period for retirement and the method to determine the amount of a retired or deceased partner and the method of payment.
  • Goodwill: The methods of valuation of goodwill at the time of admission and retirement of a partner.
  • Audit of Accounts: Whether the firm’s books will be audited or not. If so, the mode of auditor’s appointment.
  • Application of Garner Vs Murray Decision: Whether on insolvency of a partner, the firm will carry on business or not and whether the Gamer Vs Murray decision will be applicable or not.
  • Settlement of Disputes: The methods for settlement of disputes. Whether arbitrator.