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Partnership Deed Format – Sample Partnership Agreement Template

Updated on :  

08 min read.

A partnership deed is an agreement between the partners of a firm that outlines the terms and conditions of partnership among the partners. A partnership firm is one of the popular types of organizations for starting a new business.

The smooth and successful running of a partnership firm requires a clear understanding among its partners regarding the various policies governing their partnership. The partnership deed serves this purpose. It specifies the various terms such as profit/loss sharing, salary, interest on capital, drawings, admission of a new partner, etc. in order to bring clarity to the partners.

Though issuing a partnership deed is not mandatory, but it’s always better to enter into a partnership deed to avoid any possible disputes and litigation among the partners. The agreement can be made between two or more partners. It must be stamped and signed by all the partners.

The partnership deed contains the following details:

  • Business of the firm: Business to be undertaken by the partners of the firm.
  • Duration of Partnership: Whether the duration of the partnership firm, is for a limited period or for a specific project.
  • Sharing of profit/loss: Ratio of sharing profits & losses of the firm among partners.
  • Salary and commission: Details of the salary, and commission if any, payable to partners.
  • Capital contribution: Capital contribution to be made by each partner and the interest on said capital to be paid to partners.
  • Partner’s Drawings: Policy regarding the drawings from the firm allowed to each partner and interest if any to be paid by partner, to the firm on such drawings.
  • Partner’s Loan
  • Duties & Obligations of partners
  • Admission, Death & Retirement of partner
  • Accounts & Audit

Note: The above elements are general clauses and there may be some other clauses that can be added to the partnership deed.

Frequently Asked Questions

Is an oral partnership deed valid?

Yes, an oral partnership deed is valid. Although the oral partnership deed is valid, practically it is better when the partnership deed is written. A written partnership deed helps to avoid any future conflict. Additionally, a written partnership deed is required for tax purposes and registration of the partnership firm. Thus, the partnership agreement should be written rather than oral.

Is a partnership deed required for partnership firm registration?

Yes. A true copy of the deed of a partnership must be filed with the Registrar of Firms to get the partnership firm registered. It is an essential document that is to be submitted to the Registrar of Firms.

How to create a partnership deed?

A partnership deed is created on a judicial stamp paper obtained from the respective State Registrar Office. The partnership deed must be created by all the partners on a stamp paper in accordance with the Indian Stamp Act. It has to be signed by all the partners and each partner should have a copy of the partnership deed. It must be registered with the Sub-Registrar/ Registrar Office of the jurisdiction where the partnership firm is located. The registration of the partnership deed makes it legally valid.

What is the stamp duty on partnership deeds?

The respective states’ Stamp Act prescribes the stamp duty to be paid to the Sub-Registrar at the time of registration of partnership deeds. Even though the stamp duty charges differ from state to state, the partnership deed has to be notarised on a non-judicial stamp paper with a minimum value of Rs.200 or more. 

Should the partnership deed be registered?

It is not mandatory to register a partnership deed, but the partners must register the deed to make it legally enforceable. The partners should register it with the Sub-Registrar/ Registrar Office of the jurisdiction where the firm is located by paying a nominal court fee and stamp duty. Each partner has to also submit an affidavit on a stamp paper of Rs.10, stating their intention to enter into a partnership.

Does a partnership deed need to be notarised?

Yes, notarisation of the partnership deed is required along with its registration. Notarisation of the partnership deed makes the agreement between partners legal which can be defended in the court of law if any conflicts arise between them. All partners should notarise the partnership deed by signing the deed in front of the public notary.

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