If one needs to understand the partnership deed, before that he/she needs to know how does the partnership deed come into existence. When two or more people want to start a new business & to share the profits & losses they come together to form a partnership such written agreement is known as ‘Partnership Deed’. One can also call it is a ‘Partnership Agreement’. And when such business gets registered by its own name the same is called as a ‘Partnership Firm’.
Partnership Deed is a written Partnership Agreement. It is basically made when two or more people want to start a new business they come together under the mutual understanding with the only purpose to do business & share profits & losses in the decided manner.
NECESSITY AND IMPORTANCE
A partnership is a business concern which deals with purely business aspects among its partners. A written document is much more useful than the oral agreement made between two or more person. As to outline & clearly specify business needs we should the creation of partnership deed is the foremost factor. The importance of creating a partnership deed is given as under:
- A well-drafted partnership deed specifies the rights, liabilities of the partners, profit sharing ratio among partners, capital requirement, etc.
- It avoids the confusion among the partners & state clearly abouteach & every partner in detail.
- In future, if any dispute has arisen then it can be settled through referring the partnership deed.