Non-Disclosure Agreement (NDA)

What is a Partnership Deed?

A Partnership Agreement is an agreement between two or more individuals who would like to manage and operate a business together in order to make a profit. It is a common business structure in India and can be contrasted to other common business structures such as a sole proprietor, an LLP, a company, or a trust.

In a partnership, several partners are able to work together (unlike a sole proprietor). Each partner shares a portion of the partnership's profits and losses, and each partner is personally liable for the debts and obligations of the partnership.

Compared to a company or a trust, a partnership can have lower setup and administration costs. However, while companies and trusts offer some protections against liability, a partnership does not. A partnership is not a separate entity from the partners. If the partnership incurs a liability, the partners are personally responsible for it. Furthermore, a partner can become liable for debts that another partner has incurred on behalf of the partnership.

Nevertheless, a partnership is a budget-friendly and convenient way for several people to go into business together and is a popular business structure for many Indians. And an important step in getting the partnership established is to make a written record of the agreement between the partners, by using the Partnership Deed.

What is the difference between a Partnership Deed and an LLP agreement?

In comparison to Partnership, A Limited Liability Partnership i.e. LLP is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The LLP is a separate legal entity, it is liable to the full extent of its assets, but the liability of the partners is limited to their agreed contribution to the LLP. The Limited Liability Partnership (LLP) Agreement is different from that of the Partnership Deed.

Is it mandatory to have a Partnership Deed?

In India, a written Partnership Deed is mandatory for registering a partnership. The partnership firm is registered under the Registrar of Firms located in each state in India.

What must a Partnership Deed contain?

A Partnership Deed typically includes the following key clauses:

• Partnership Information: name and address of the partnership firm, and details of the partners involved.
• Nature of business: A clear and detailed description of the business activities the partnership will be undertaking.
• Term of partnership: The duration of the partnership can be for a fixed period or indefinite period.
• Capital contribution: Specifies the amount of capital to be contributed by each partner in the form of money, property or expertise.
• Profit sharing ratio: Defines the percentage of profit or loss each partner will share.
• Dissolution of partnership: Defines the circumstances under which the partnership will be dissolved or wind up and the process of winding up.

Who can enter into a Partnership Deed?

Any two persons above the age of 18 years (major), with a sound mind and not disqualified by law from entering into a contract can enter into a Partnership Deed.

What can be the duration of a Partnership Deed?

There is no specified period for a Partnership Deed. The period will be as mentioned under the Partnership Deed such as for a particular period, completion of a certain project, or for an indefinite period.

What has to be done once a Partnership Deed is ready?

Once the Partnership Deed is completed, it needs to be printed on a non-judicial stamp paper. The stamp duty varies from state to state. The information can be found on the websites of the revenue departments of the concerned states.

All the partners should sign and date the Partnership Deed. Each partner's signature should be witnessed by an independent adult, meaning somebody over 18 years old, who is not involved with the partnership. This means the partners cannot witness each other, and people closely connected to the partners (such as their respective spouses) should not act as witnesses either.

The partners should keep copies of the Partnership Deed for their records. If the partners wish to change any of the terms of the Agreement, they should be sure to do so in writing.

Is it necessary to register a Partnership Deed?

No, It is not mandatory to register the Partnership Deed. However, legal protection for partnerships in disputes between partners can only be availed once the partnership is registered. The partnership can only file a petition against a third party if the partnership is registered.

Which laws are applicable to a Partnership Deed?

The Indian Partnership Act, 1932 is the law governing partnerships in India. General principles of the Indian Contract Act, 1872, as provided by common law, may also apply.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.