What Is A Partnership Deed Format?

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A partnership deed is the documented agreement between two or more partners of a firm. A partnership deed format outlines the terms and conditions of a partnership amongst these partners.

The smooth functioning of an organization that is owned by two or more individuals depends on the partnership deed format, which specifies various terms and conditions such as profit and loss sharing, salary, interest on capital, admitting a new partner, drawing, etc. This format ensures clarity so that there is no dispute between partners if a business fails.

Although it isn’t mandatory to issue a property deed, it is always better to have one to avoid any dispute in case a business fails or if a partner decides to leave to pursue other interests. The partnership deed format, if created, is required to be stamped by all partners.

If you run a company with two or more other stakeholders, and want to have a partnership deed, you have to ensure that the partnership deed format looks like this:

Mention the business of the firm i.e. the nature of what services your company offers
The duration of the partnership i.e. in case the partnership is for a limited period or for a specific period
The ratio of sharing i.e. profits and losses
Details of salary and commission
Capital contribution made by each partner and the interest on the said capital to be paid to partners
Drawings from the firm allowed for each partner and the interest (if there is any) to be paid)

Advantages of a partnership deed

Some of the advantages of having a partnership deed include:

The partnership deed serves as a formal agreement between two or more individuals running a small firm or a large company. This is one of the biggest reasons why a partnership deed works better than oral agreement.
Partnership deeds clearly state the rules and regulations, as well as profit sharing ratios, that are to be followed by two or more individuals. Furthermore, the deed is signed while registering a company, which will mean that the individuals will be on the same page.
Partnership deeds help prevent any confusion as the deed clearly states the details of each partner.
Partnership deeds can help two or more partners resolve disputes

Things to remember while drafting a partnership deed

The partnership deed format is vital while writing the partnership deed. While drafting the deed, you need to remember the following things:

Remember that the partnership deed is a legally binding contract between two or more individuals who are partners in a firm.
A minimum two individuals make up the base of drafting a partnership deed.
Partner profit is shared among all partners.
Partners are expected to be answerable for each other’s actions.
When a partner retires, the individual must give up the rights and liabilities, as well as company stake.
In case of a partner’s demise, then the deed is referred to regarding how to move forward. If there are no conditions or clauses, then the deceased partner’s successor gets all the rights and privileges.