Partnership Deed – Meaning, Type, and Importance

A partnership deed is a legally authorised and valid agreement of a business partnership that states all the terms and conditions agreed upon by all the partnership parties.

Here are the benefits of partnership deeds –
1. Avoids chances of confusion over the profit and loss distribution ratios between the partners.
2. Mentions the roles and responsibilities of each partner as an individual.
3. Avoids any future disputes between the partners.

A Company is a legitimate entity that can own properties and assets under its name, or take part in contracts and be held liable for its actions. Whereas the Partnership Deed is an agreement between partners to run a business and divide the profit and loss margins.

At the time of the dissolution of a partnership deed, the business sacrifices its existence along with discarding all the assets in control of the firm and settlements of accounts, assets, and other liabilities.

Reconstitution of a partnership deed can be possible under the scenarios when a change in profit sharing ratios among the partners occurs, a new partner enters, retirement, and the death of a partner.

Yes, partnership deeds can be both oral and written. Although it is advised to make it written to avoid future conflicts as well as it could be proved fruitful for tax purposes and registration of the business firm.

The Indian Partnership Act, 1932 clearly says that a partnership could be embodied without a deed. However, it is advised to submit a true copy of the partnership deed to avoid future conflicts and disputes among the partners.

The Stamp Duty charges vary from state to state, yet the partnership deed has to be notarized over a non-judicial stamp paper with the least value of Rs.200 or more.

Based on the Indian Partnership Act, of 1932, it’s not required to register a partnership deed as the firm is not a legal entity. Yet, the partners must register it with the Sub-Registrar/ Registrar Office of the jurisdiction of the partnership firm’s location to make it legally strong.

Yes, it is required to make the partnership deed notarized along with its registration which will make the agreement legal and it will be eligible to be defended in the court of law at the time of controversies between the partners. A partnership deed should be notarized by the partners by signing the agreement in front of the public notary.

Yes, the modification of the partnership deed is possible under the mutual consent of all the partners. The modified agreement should be signed by all the partners and re-registered with the Sub-Registrar office where the original deed was registered followed by the submission of the deed to the Registrar of Firms for their record.