Partnership Deed, Partnership Deed Clauses, What is a Partnership Deed, Benefits of a Partnership deed, Ebizfiling

What is a Partnership Deed? And Partnership Deed Clauses

What is a Partnership Deed? Benefits and various kinds of Partnership Deed Clauses


Clarifying the legal relationship between two or more people before starting a business is crucial so that everyone is aware of their responsibilities and rights in the enterprise. Individuals typically enter into a Partnership Deed to convey their obligations and advantages for forming a Partnership Firm. This article will walk you through the information on “What is a Partnership Deed?”, the Benefits of a Partnership Deed, and information on Partnership Deed Clauses.

What is a Partnership Deed?

A Partnership Deed is a legal document that outlines the parameters under which a partnership business will operate. It is a written contract that has been signed by each partner and is properly stamped and registered. It outlines the partners’ roles and responsibilities. Any clause that conflicts with The Indian Partnership Act of 1932 must not be included in the partnership deed. A written agreement is useful in preventing and resolving disagreements among partners, even though it is not required to have one. A partnership deed’s terms and conditions can be modified with the approval of all the partners.

Benefits of a Partnership Deed

  • Each partner’s obligations, rights, and liabilities are governed by it.
  • Because all of the terms and conditions of the partnership have been mentioned out in the deed in advance, it helps to avoid any misunderstandings between the partners.
  • The partnership agreement can be simply consulted in the event of a dispute between the partners, making a resolution simple.
  • It dispels uncertainty regarding the profit and loss distribution rate between partners.
  • It makes it very apparent who does what. Roles for each partner can be specified.
  • The partnership agreement may also include clauses that specify the partners’ appropriate compensation.

Different clauses for a Partnership Deed

  • Name and Address of the Partnership Firm

It is advisable to identify the name of the business / partnership firm clearly since it gives the partnership a fictional identity. Two people may have different types of partnerships with respect to different enterprises. Similar to this, it is also important to include the registered address of the partnership firm because this is where all formal correspondence and contacts will originate.

  • Business Type and Purpose

Because all legal formalities solely pertain to the business, it is essential that the business be clearly defined. The components of the Partnership Firm might be added if the nature and scope of the business are complicated and calls for a thorough explanation.


By holding discussions and reaching a consensus, the partners can also add or remove anything from the nature and scope of the contract without invalidating it.

  • Monetary interest

Due to unforeseen business needs, a partner can be required to make additional finance contributions that will be considered as loans and subject to interest on capital.

  • Partner’s Withdrawal Clause

A partner’s personal withdrawal restriction must be set forth in order to prevent any unauthorized or excessive withdrawals that could be detrimental to the company.

  • Accounts

The firm must maintain a private account for all payments made in its name, and it is the founders’ duty to ensure that all books, ledgers, and accounts are accurately maintained and recorded. Additionally, it should be specified in the contract how the profit or loss distribution will be calculated after the completion of the yearly accounts.

  • Responsibilities of Partners

Since the essential structure of the partnership depends on the partners’ acceptance of their responsibilities, this clause—which must be comprehensive—forms the basis of the partnership document. Regular obligations include promptly completing the contribution payment, repaying any monies received in the partnership’s name, making every effort to promote the business, keeping lines of communication open between partners, etc.

  • Prohibited conduct

While the duties and obligations provision gives a general overview of the partners’ responsibilities, a separate clause that succinctly lists the actions that are expressly prohibited can help to clarify the partners’ roles. This section will include prohibited behaviors that might be covered by the partnership agreement.

  • Clause for partner’s duty

It is important to recognize each partner’s commitment to the business. A contract that stipulates that the partners will work exclusively for the business and will not work for any other entities without the other partners’ consent can be added. The duty clause may have been applied to this contract.

  • Intangible assets

Since a partnership firm is regarded as an independent entity, all assets—physical or digital—will be solely owned by the business. This clause must specify that all intellectual property created during the course of the business shall be managed in a way that prevents any Member from disputing his or her ownership of it.

  • Goodwill

The reputation of the partnership corporation is owned by the company in the market.

  • Dissolution of a Partnership Firm

In circumstances where the partners do not conclude according to plan before the term period is up in such conditions, the contract will specify a procedure for the firm’s dissolution in that situation, and the firm will be wound up and its assets dispersed.

  • Non-compete

Any partner who quits the firm as a result of a suspension or retirement is not allowed to start a new business that is similar to the partnership business.

  • Confidentiality

A business might be founded on ground-breaking copyrights, top-secret concepts, marketing tactics, and a variety of delicate business dealings. As a result, it is crucial for partners to include a confidential clause in a partnership agreement to protect the firm’s confidential secrets.

  • New partner in a Firm

It is necessary to provide the introduction procedure for new collaborators in a Partnership Deed Clauses.


The elements mentioned above are basic clauses found in practically every partnership agreement. What is most important is that the interests of the partners and the firm must be secured, and any agreement drafted must be in compliance with the applicable law given the current dynamics of the business world.

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Author: zarana-mehta

Zarana Mehta is an MBA in Finance from Gujarat Technology University. Though having a masters degree in Business Administration, her upbeat and optimistic approach for changes led her to pursue her passion i.e. Creative writing. She is currently working as Content Writer at Ebizfiling.

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