What is a Partnership Deed?
“A partnership deed can be defined as a document that is prepared to explain important points so that the chances of clash among partners are minimized to a great extent. ”
Whenever a partnership is formed, the partners are bound in two kinds of responsibilities. One is the individual responsibility of each partner and the other is the collective responsibility of all the concerned partners.The acts of partners in normal course of business unite the firm. If the partners work with understanding and collaboration, the company is sure to function flawlessly.
If there is mistrust among them, conflicts are bound to surface every now and then. It is because business is so complex a job that various kinds of decisions are to be taken almost on a daily basis.
The past experience of partnership firms show that there are disputes among partners over countless things and this results in the shutting down of the business.
So, a partnership deed can be defined as a document that is prepared to explain important points so that the chances of clash are minimized to a great extent. Such a document consists of all the significant clauses like name of the business, contribution of capital, allocation of profit and the like.
Partnership is a document containing all the matters according to which mutual rights, responsibilities and duties of the partners in the carrying out and administration of the matters of the firm are determined. The deed is surely to be signed by all the partners.
A partnership deed can be effected by word of mouth or can be in black and white. In some countries a written accord among partners is indispensable to bind them lawfully whereas in USA such an accord can be oral or on paper.
A written accord should be favored because then nobody can create a row as regards the contents of the deed. There may be disagreements about what was agreed upon earlier if the contents are not presented in writing. A clause mutually agreed to by the partners should only be made a part of the partnership contract.
However if the point of allocation of profit is not addressed to in a deed, each partner is deemed to get an equal share of profits and is also to bear equal burden in case of loss.
Author - DeeKay
This article was created by DailyOjo staff. Report Spam/Abuse