Posted on June 12, 2010.
Partnership Agreement / deed What partnership deed?
partnership agreement in writing is called partnership agreement. Partnership deed is a document that is signed by all partners that contains all the elements to determine and regulate the mutual rights, obligations and responsibilities of partners in the conduct and management of the affairs of society. It may also be referred to as articles of partnership "containing the name, nature of business, capital, the duration of the company, etc.
Need and importance of the partnership agreement.
It was observed that the partners begin bickering and disputes later (it closes worked for some time. It is therefore desirable that the articles of partnership should be established by the lawyer. A partnership deed on stamp paper is considered valid court against any dispute. The importance of partnership deed can be judged by the following facts.
1. It is the training base of the company.
2. It defines the mutual rights, obligations and responsibilities of partners.
3. It helps to reduce areas of conflict between partners.
4. It provides a benchmark for the conduct of business enterprises.
Terms of Partnership Deed or content
The partnership deed usually contains the following clauses.
1. Name and location of the business.
2. The nature of the business.
3. The amount of capital paid by each partner.
4. Provisions or reinvestment in the business.
5. The rights, powers and obligations of all partners.
6. Length or business life.
7. The method of distribution of profits and loss sharing.
8. Method of admitting a new partner.
9. Procedure for withdrawal of a partner.
10. The method of evaluation of goodwill and / or the retirement or death of a partner.
11. Method of revaluation of assets or liabilities to the admission, resignation or death of a partner.
12. Procedure for the expulsion of a partner.
13. Provisions to be followed if one partner becomes insolvent.
14. Salary, if any, payable to partners in the management of the company.
15. The method of preparation of accounts and the arrangement for verification.
16. Procedure for the dissolution of the company and settle accounts.
17. Arbitration of disputes between partners.
18. Operation of bank account.
Items above are not the final list of terms. Any clause agreed between the partners may be included in the agreement. If the act is silent on any point, the provisions of the Partnership Act 1932 will apply.
