Partnership Deed Format PDF – In this article, we are providing you detailed information about the Partnership Deed and also Format of Partnership Deed PDF A partnership deed is also called a partnership agreement
A) Introduction –
Partnership Deed – In India, the partnership business is regulated by The Indian Partnership Act, 1932. This particular Act is not exhaustive for the legal validity of partnership as the provisions of the Indian Contract Act, 1872 are also applicable to the partnership business. The Indian Contract Act is significant because partnership relation is not created by status but by contract. Hence there is a difference between partnership by contract & partnership by status. .g.Hindu Undivided Family business is not a partnership because it has been established by status or by birth. In partnership, such contract is called as “Partnership Deed”.
B) Meaning –
The partnership deed particularly is not defined under the Act. But the term “Partnership” is defined in Sec. 4 of the Act along with “Partners”, “Firm”, & “Firm Name.”
1) Partnership – Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
2) Partners, Firm, Firm name – Persons who have entered into a partnership with one another are called individually, partners and collectively a firm, & the name under which their business is carried on is called the firm name.
It can be said that Partnership deed is an agreement between partners which sets out the rights, liabilities, profit sharing ratio, nature of the business, firm name, names & addresses of partners etc. along with other necessary details.
Partnership Deed is also called as Partnership Agreement.
C) Parties to the deed –
The partnership deed can be entered into by the individuals who are competent to contract as per Indian Contract Act. As per Indian Contract Act Sec. 11 the persons who are of sound mind, not disqualified by law to enter into a contract and is major. In India Indian Majority Act,1875 (Sec.3) provides about the age of majority i.e. 18 years.
Following persons (natural/legal) can enter into partnership deed –
D) Number of persons –
As per the Companies Act,2013 minimum number required for partnership is 2 persons & maximum number is 100.
E) Contents of Partnership Deed –
Partnership deed includes the following details –
1) Names & Addresses of Partners
2) Nature of business
4) Duration of the partnership (if at will)
5) Profit & Loss sharing ratio
6) Rights of partners
7) Liabilities of partners
8) Conflict resolving methods if any conflict happens to follow
9) Remuneration of partners
10) Books of account & terms of audit
11) Retirement of partners
F) Registration & Importance –
For registration of firm partnership, the deed is a must element.
Although registration is not compulsory for the firm under the Act but if the firm is not registered it cannot get advantages after registration which are important for the position of the firm.
These advantages are –
The registered firm can :
i) file suit against the third party
ii) file suit against a partner
iii) partner can file suit against the firm
iv) Increases firms trust value
v) registered firm can claim set off in suit by the third party.
vi) can convert firm into other entity e.g.LLP or Private limited Company
Registration: Registration of partnership firm is done in accordance with the procedure provided in the provisions of the Indian Partnership Act,1932, under Sec.58 & 59. The registration of the firm is done by the Registrar of the Firm who is appointed under sec.57 by the State Government. Sec.58 provides for application for registration & contents & other procedure to be followed. Sec. 59 provides about “Registration” of the firm by an entry in the Register of Firms. The date on which entry is recorded in such register is the date on which the firm is deemed to be registered.
Why Partnership deed is necessary
Partnership deed Define the rights, obligations, and responsibilities of each partner. A written document is much more useful than an oral agreement between two or more people.
This helps to avoid misunderstandings between partners because all the terms of the partnership are negotiated in writing in advance. Disputes between partners can be easily resolved because you can easily refer to the partner agreement.
A partnership is a business subject that involves the purely business aspect of the relationship between partners. In describing and clearly defining the needs of the company, we need to consider that the establishment of a partnership agreement is the main factor.
The importance of creating a partnership agreement is defined as follows: a well-written partnership agreement defines the rights, obligations, profit margins between partners, capital requirements, etc. of the partners. Avoid confusion among partners and discuss each partner in these agreements in detail. If there is a dispute in the future, it can be resolved by referring to the partnership agreement.
Format of Partnership Deed PDF
DEED OF PARTNERSHIP
This DEED OF PARTNERSHIP entered into at ___ on this _____ st Day of ________ 20__. BETWEEN
1] MRS. ____________________, Age ____yrs, Occ. Business, R/at. ___________________________________________,. (Which expression shall unless repugnant to the context or mean thereof be deemed to include her heirs, legal representatives, successors, administrators, executors and assigns.) Hereinafter to be called the FIRST PARTY.
2] SHRI. _____________________________, Age ___Yrs, Occ. Business, R/at, ___________________________________, (Which expression shall unless repugnant to the context or meaning thereof be deemed to include her heirs, legal representatives, successors, administrators, executors and assigns.)
Hereinafter to be called the SECOND PARTY) NOW THIS INDENTURE WITNESSETH AND IT IS AGREED TO BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:
1] FIRM NAME:
The Parties to the Partnership hereto agree to carry on the business hereinafter mentioned on the terms and conditions herein set out, in the name and style of “M/S. __________________” or any other name or names as may be agreed by and between the parties thereto from time to time.
2] REGISTERED OFFICE:
The Registered office of the Partnership Firm shall be at _______________________________,. The Parties may open branches at such other places as may be agreed upon.
3] COMMENCEMENT AND DURATION:
The business of Partnership hereby constituted shall be deemed to have commenced with effect from ___________ 20__ on the scheduled mentioned above.
The business of the Partnership (hereinafter referred to as ‘the firm’ shall be that of _____________________________, to fulfill all the requisite condition and acquired the necessary sanctions/permissions that may be required for the development of the partnership business
That, the Profit and Loss of the partnership business shall be divided between the partners to this Deed in ratio as follow; 1. Mrs. ___________________ 90 % 2] Shri. ___________________ 10 %
6] BANK ACCOUNT:
Bank Account or Accounts whether fixed, current, term deposit, cash credit, overdraft, letters of credit or loan accounts shall be opened, kept or maintained by the Partnership firm name and with _______________________________________ as the Partners may from time to time agree upon and the same shall be operated by First Party. All sums received by the firm whether in cash or through cheque or other negotiable instruments or otherwise shall be deposited in such banking account except as may be required for the exigencies and current expenses of the business of the firm. PROVIDED HOWEVER that the parties may at the time of opening the account or at any time thereafter agree in writing to open account in such other name or names and to operate the same in the manner as the parties hereto may mutually agree.
Proper, full correct, and regular accounts of all transactions and dealings of the Partnership shall be made and maintained at the office of the firm or at such other place as the parties hereto may agree upon and the same will be open for inspection of any of the Partners hereto at any time. Each partner shall have free access to them at all reasonable times and all shall be at liberty to make such extracts or copies there from as they may think fit.
The financial year of the firm hereby constituted shall commence from 1 st Day of April and ends on 31st March. At the end of each accounting year, every year during the continuance of the firm a general account of the business carried on in that year shall be made and taken of the Capital and Assets of the firm and a statement of accounts, namely a Balance sheet and Profit and Loss Account will be prepared and signed by the partners. If necessary or required by law the accounts will be got audited by a Chartered Accountant. Each party shall be bound by such statement or account unless any manifest error omission therein is discovered or detected and brought to the notice of the other partner within three months from such signature in which case the same shall be rectified forthwith.
All the Policy and other decisions those relating to day to day business of the firm, will be taken by both the Partners.
All the working staff such as clerks, peons, accountants, cashier salesmen and other will be appointed by joint consent of the parties, and their wages and salaries and other emoluments will be fixed by mutual consent of both the partners.
10] EACH OF THE PARTNERS SHALL:
a. participate and attend to the business of the firm to the greatest common advantage of the firm;
b. be just and faithful to each other;
c. Render true accounts and full information of all moneys affecting the firm to the other;
d. Indemnify the firm for any loss caused to it by willful negligence or fraud in the conduct of the business;
e. Attend to the business of the firm diligently and actively;
f. Not withdraw any amount for his own benefit or use a remuneration or otherwise without the consent of the others, except to the extent hereinbefore provided;
g. Pay his separate debts punctually and keep indemnified the other partners and the property of the firm against attachment seizure of sale thereof and all expenses on account thereof.
11] NEITHER OF THE PARTNERS SHALL:
without the consent in writing of the other Partner : (a) Except in the ordinary course of business of the partnership endorse or accept any Notes or Bill of Exchange or Hundi or borrow any substantial loan or become bail guarantor or surety for any person or do or knowingly or willingly suffer to be done anything to jeopardize the capital of the firm or whereby the capital of the firm may be attached or taken in execution.
(b) Compound, assign or release any debt due to the firm except upon payment in full.
(c) Submit any dispute with any other person to arbitration or compromise or relinquish the claim.
(d) Withdraw any suit or legal proceedings filed by the firm.
(e) Admit any liability of the firm.
(f) Acquire or dispose of any moveable or immoveable property, except the stock-in-trade in the ordinary course of business.
(g) Assign or transfer his share or any interest of the firm.
(h) Admit any person as a partner in the firm.
(i) Borrow any moneys for or in the name of the firm, or create any security or change on the assets of the firm.
(j) Stand as a guarantor or surety for any person in the name of the firm or for and on behalf of the firm. Any Partner committing any breach of any of the terms and conditions and stipulations herein contained shall indemnify the others from all losses and expenses on account thereof.
12] RETIREMENT OF PARTNERS:
In the event any of the parties hereto desires to retire from the Firm or to dissolve the firm he shall give the other partner at least one month’s previous notice in writing to that effect and on the expiration of the said period the Partner shall stand retaired. If any partner retires from the firm and the partnership is dissolved and on such dissolution of the business of the firm is taken over by the other partners. The dissolving partner give all the accounts of the assets, debts and liabilities will be made and retiring partner will be responsible any of the act done by retiring partner along with the other partners till retiring from the partnership firm in respect of any profit and loss or any civil and criminal liability even after his retirement.
13] DEATH OF THE PARTNERS:
In the event of death of any of the partners during the currency of the said partnership, the legal heirs of the partner shall be entitled to continue and may carry on the said business, in the same name and style. The dues and claims of the deceased partner, to his heirs, successors or legal representatives as the case may be, shall be worked out, which will be certified by the Chartered Accountant and shall be paid in the manner as may be agreed between the surviving partner and claimant of the deceased partner.
If during the continuance of the said partnership or at any time afterwards any difference shall arise between the partners and the heirs, executors or administrators or legal representatives of the other or between their respective heirs, executors, administrators or legal representatives
in regard to the construction of any of the articles herein contained or to any division, act or thing to be made or done in pursuance hereto or to any other matter or thing relating to the said partnership the same shall be forthwith referred to Arbitrators, two to be appointed by all the partners to the reference or to an Umpire chosen by the Arbitrators before entering upon the reference and every such reference shall be deemed to be an Arbitration in accordance with and subject to the provisions of the Arbitration Act for the time being in force and the award or awards of such Arbitrators or the umpires, as the case may be, shall be binding on all the parties to the said reference.
15] REGISTRATION OF THE FIRM:
The parties shall as early as possible but in any event within the prescribed period get the firm registered under the Partnership Act, 1932 and registered under or notified to the I.T. Office as required by the Income Tax Act, 1961. 16] ALTERATIONS OR ADDITIONS OF ANY CLAUSE OF THIS PARTNERSHIP DEED: Not with standing any thing stated or provided therein the partners shall have full power and discretion or modify, alter or vary the terms and conditions of the PARTNERSHIP DEED in any manner whatsoever they think fit by mutual agreement which shall be reduced in writing and be signed by all the partners and thereupon the said writing shall become appendage and part of the deed. IN WITNESS WHEREOF the parties hereto have hereunto set and subscribed their respective hands on the day and year first hereinabove written.
SIGNED AND DELIVERED by the } Withinamed }
in the presence of ———— }
1. Mrs. _____________
2. Shri. ____________