Question

What are the contents of the partnership deed?

State the contents of the partnership deed.

Answer 1

1. Name: Name of the Firm.
2. Nature of Business: The nature of the proposed business is to be carried out by the partners.
3. Duration of Partnership: Duration of the partnership business, whether it is to be run for a fixed period of time or whether it is to be dissolved after completing a particular venture.
4. Capital Contribution: The capital is to be contributed by the partners. It must be remembered that capital contribution is unnecessary to become a partner, for one contributes his organizing power, business acumen, managerial skill, etc., instead of capital.
5. Withdrawal from the Firm: The amount that can be withdrawn from the firm by each partner.
6. Profit/Loss Sharing: The ratio in which the profits or losses are to be shared. If the profit-sharing ratio is not specified in the deed, all the partners must share the profits and bear the losses equally.
7. Interest on Capital: Whether any interest is to be allowed on capital, and if so. The rate of interest.
8. Rate of Interest on Drawing: Rate of interest on drawings, if any.
9. A loan from Partners: Whether loans can be accepted from the partners, and if so, the rate of interest payable thereon.
10. Account Keeping: Maintenance of accounts and audit.
11. Salary and Commission to Partners: The Amount of salary or commission payable to partners for their services. (Unless this is specifically provided, no partner is entitled to any salary).
12. Retirement: Matters relating to the retirement of a partner. The arrangement to be made for paying out the amount due to a retired or deceased partner must also be stated.
13. Goodwill Valuation: Method of valuing goodwill on the admission, death, or retirement of a partner.
14. Distribution of Responsibility: Distribution of managerial responsibilities. The work that is entrusted to each partner is better stated in the deed itself.
15. Dissolution Procedure: The procedure for dissolving the firm and the mode of settlement of accounts thereafter.
16. Arbitration of Dispute: Arbitration in case of disputes among partners. The deed should provide the method for settling disputes or differences of opinion. This clause will avoid costly litigation.