What is partnership deed?
Partnership Agreement
Partnership agreement in writing is called partnership deed. Partnership deed is a document which is signed by the partners and which contains all the matters determining and governing mutual rights, duties and liabilities of the partners in the conduct and management of the affair of partnership.
Partnership is also known as articles of partnership. If contains the name, nature of matter(business, Capital, duration of partnership and etc.
Law does not require the agreement to be in writing but in order to avoid dispute it is advisable that the agreement should in written.
Need and important of partnership agreement :-
Articles of partnership in writing is an important tool to avoid future dispute among both(all) partners. A partnership deed on stump paper in considered to be valid in court any dispute.
Following facts shows the importance of partnership agreement.
1. It defines the mutual rights, duties and other liabilities.
2. It helps in minimising the areas of disputes amongst partners.
3. It serves as guidepost for the conduct of the form.
Clauses of partnership agreements
a. Name of the company firm or matter and location of business
b. The nature of business
c. The amount of capital to be contributed by all partners
d. The duties, power and obligation of all the partners.
e. Provisions of reinvestment in the business.
f. Length of the partnership.
g. The methods of distribution of profit and sharing of the losses(profit sharing ratio)
h. Procedure of admitting a new partner.
j. Procedure to be followed in case a partner becomes insolvent.
k. Salary, if any, payable to the partners for managing the business.
l. The method of preparing accounts and management of audit.
m. Operation of bank account.
n. Rate of interest, if, any, on capital.
o. arbitration in case of disputes among partners.
Note: This is not the final list of clauses any clause mutually agreed by partners can be included in the agreement.
Kinds of Partner:-
The partner of a business, firm are broadly classified into three main categories.
i). General Partners.
ii). Special Partners.
iii). Other Partners.
General Partners:- all partner of a firm are considered general partners. General partners are those whose liability is limited in the firm.
General Partners are further divided into two typed
a. Active Partner.
b. Sleeping Partner.
ii). Special partners:- special partners are partners whose liability is limited to the extent of their capital contributed in the firm. They are only found in limited partnership. The special partners can not take part in management of the firm. In Pakistan limited partnership is not recognised. Limited Partnership is very common in America.
iii). Other Partners:- The other types of partners found in secret partners & etc.
Note:- If deed is silent on any point, the provision of partnership act 1932 will apply.
a. Name of the company firm or matter and location of business
b. The nature of business
c. The amount of capital to be contributed by all partners
d. The duties, power and obligation of all the partners.
e. Provisions of reinvestment in the business.
f. Length of the partnership.
g. The methods of distribution of profit and sharing of the losses(profit sharing ratio)
h. Procedure of admitting a new partner.
- i. The method of valuation of goodwill on admission or retirement or death of partner.
j. Procedure to be followed in case a partner becomes insolvent.
k. Salary, if any, payable to the partners for managing the business.
l. The method of preparing accounts and management of audit.
m. Operation of bank account.
n. Rate of interest, if, any, on capital.
o. arbitration in case of disputes among partners.
Note: This is not the final list of clauses any clause mutually agreed by partners can be included in the agreement.
Kinds of Partner:-
The partner of a business, firm are broadly classified into three main categories.
i). General Partners.
ii). Special Partners.
iii). Other Partners.
General Partners:- all partner of a firm are considered general partners. General partners are those whose liability is limited in the firm.
General Partners are further divided into two typed
a. Active Partner.
b. Sleeping Partner.
ii). Special partners:- special partners are partners whose liability is limited to the extent of their capital contributed in the firm. They are only found in limited partnership. The special partners can not take part in management of the firm. In Pakistan limited partnership is not recognised. Limited Partnership is very common in America.
iii). Other Partners:- The other types of partners found in secret partners & etc.
Note:- If deed is silent on any point, the provision of partnership act 1932 will apply.
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