What is Partnership Deed
A partnership deed which is also known as Partnership Agreement is an agreement between the partners of a firm that defines the terms and conditions of partnership between the partners. It specifies the various terms such as Capital investment profit/loss sharing, salary, interest on capital, drawings, admission of a new partner, dissolution of partnership etc. in order to bring clarity to the partners.
Benefits of Partnership Deed
Having a Partnership Deed provides a legal structure and responsibility
amongst the partners of the firm. And the registration of partnership
agreement is not always mandatory.
Following are some of the benefits of the partnership deed:
- It states the rights, duties, and liabilities of all the partners.
- It helps to avoid any misunderstanding between the partners because all the terms and conditions of the partnership have been laid down beforehand in the deed.
- If any dispute arises amongst the partners, it may be settled easily by referring to the terms of Partnership Deed in terms of the Partnership Act.
- It helps to determine the exact profit and loss ratio amongst the Partners.
- It helps to determine the roles & responsibility of the individual Partners.
- Partnership deed can also be referred to get clarity of certain clauses such as salary of the partners, interest on capital, drawing, admission of new partner etc.
Hence, it is always advised to have a written Partnership Deed instead of oral agreements.
Process of Partnership Deed Creation at IOUX.