Demystifying Partnership Deeds: Essential Elements Explained

Posted On : April 10, 2024
Demystifying Partnership Deeds: Essential Elements Explained
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Partnership is one of the most popular types of organization to set up a new business in India. At least 2 partners are required to start a partnership business. The partners establish a partnership company with the help of a partnership agreement. The partnership agreement is an agreement between the partners of the association, which defines the terms of the partnership between the partners.

What is a Partnership Deed?

Partnership Deed, also known as partnership agreement, is a legal document signed by two or more partners, who come together and decide to run a business for profit. The partnership deed helps resolve disagreements or conflicts between partners arising from partnership standards. The purpose of a partnership deed is to provide a clear understanding of the roles of all the partners and ensure the smooth functioning of the partnership firm.

What is the Importance of the Partnership Deed?

The partnership deed defines the position of the partners of the company. Below is the importance of a partnership document:

  • It helps the partners to define the terms of their relationship.
  • It regulates the nature and responsibility of the business, the rights and obligations of all the partners.
  • It helps to avoid misunderstandings between the partners because all the terms of the partnership are defined in the contract.
  • Disputes between partners are resolved according to the terms of the partnership agreement.
  • There is no ambiguity between partners about the distribution of profits and losses.
  • It mentions the role of each individual partner.
  • It includes the compensation paid to the partners, thus avoiding disputes and confusion.
  • Ensures the proper functioning of the company because the conditions and obligations between the partners are in writing.

Types of Partnership Deed

  • General Partnership Deed: This partnership deed contains the conditions of an open company where each partner shares in equal shares and are responsible for the management of the business of the company. They are also jointly and severally liable for any debts or obligations.
  • Limited Partnership Deed: A limited partnership deed consisting of limited partners as well as general partners. general partners have unlimited liability for the partner's debts, while limited partners have limited liability and do not actively participate in the management of the company.

Contents of the Partnership Deed

The Partnership Deed contains the following information:

  • Company name
  • Company information
  • Firm duration
  • Firm location
  • Capital investment
  • Profit/loss share
  • Salary and commission
  • Partner's drawings
  • Partner's loan
  • Partners' duties and responsibilities
  • Partners and senior members

Registration of Partnership Deed

The partnership deed is registered under the Indian Registration Act, 1908. It must be printed on a non-judicial stamp with a minimum value of Rs.200 by the partners of the firm. All partners must sign it and each partner must have a copy of the partnership deed.

Once the partners have signed the document, it must be registered with the sub-registrar/registrar of the jurisdiction where the partnership firm is located. Stamp duty for partnership registration varies from state to state. The stamp law of each state provides for stamp duty to be paid to the sub-registrant after registration. Registration of Partnership firm makes it legally valid.

Documents required for Registration of Partnership Deed

Documents required for registration of partnership are as follows:

  • PAN card of all partners.
  • Address proofs of all partners e.g. voter card, Aadhar card, driving license etc.
  • Address proof of company

Tips for Drafting a Partnership Deed

The following guidelines can help you draft a partnership deed:

  • Partners must carry out the deed together.
  • The partners should mutually agree on the drafting of the deed.
  • Avoid using ambiguous statements and clauses.
  • The clauses must expressly provide the information or description.
  • It must be printed on e-stamp paper that costs at least Rs. 200.
  • Every partner needs to sign every page of the deed.


In conclusion, a business arrangement in which two or more individuals formally agree upon terms is known as a partnership. They consent to share ownership of the company, assign duties for managing it, and split any profits or losses it makes. A document called a partnership deed lists these characteristics of partnerships. For more information related to Partnership deed, you should consult a good Indian corporate law firm for insightful information.

Frequently Asked Questions

  1. What are the two types of partnership Deed?
    The two main types of partnership documents are Limited Partnership Deed and General Partnership Deed.

  2. What are the 4 important points in a partnership deed?
    The 4 important points in a partnership agreement are:
    1. Partnership Capital Investments: Amount contributed by each partner
    2. Profits and losses sharing: the distribution of profits and losses between each partner.
    3. Management responsibilities: the roles and responsibilities of each partner
    4. Dispute Resolution: Procedures about dispute resolution in case of dispute.

  3. What is the format of a partnership deed?
    A partnership deed usually contains the following information:
    1. Name and business address
    2. Names of business partners and addresses
    3. Type of business
    4. Duration of partnership
    5. Each partner's capital share
    6. Profit sharing
    7. Place of business
    8. Salary and commission
    9. Partner drawings
    10. Partner loan
    11. Trade date

  4. What are the four types of partnership?
    The four types of partnership are:
    1. General Partnership
    2. Limited Partnership
    3. Limited Liability Partnership and
    4. Public Private Partnership
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