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+Before moving to the importance of partnership deed, let’s discuss partnership first.
A partnership is a mutual agreement between two or more parties having similar interests. In this arrangement, the duties and earning are discussed and negotiated upon. In simple words, A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses.
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A partnership deed, also known as a partnership agreement is a document stating the agreement between two individuals or firms. It safeguards the interest of both parties through mutual discussion and agreement of profits, losses, capital, etc. It is a legal and notarized document under the Indian Partnership Act,1932. It provides clarity of the role that each member needs to play in the partnership hence eliminating the chance of disagreements and allowing the firm to function smoothly.
In case you are looking to create a partnership deed, you can create it here.
Partnership deeds play a vital role in a well-functioning partnership, and there is a huge importance of partnership deed. Here is why:
While along with the advantages/ importance of partnership deed, this model also carries a number of important disadvantages.
A complete partnership deed may have the following contents:
See this also: Documents Required for Registration of a Partnership Deed
In conclusion, a partnership deed is what allows the smooth functioning of a firm run by two or more parties. It is a legal and notarized document hence it protects the partners and their rights. It helps solve disputes that may take place in the future by providing maximum satisfaction to all parties. A partnership deed is a key ingredient to a smooth sailing partnership It also brings out the agenda and motives. A mutually agreed on and signed deed also encourages clear cut communication that plays an important role in a partnership.
Through time, the deed may be edited and changed after the parties mutually agree to do so. This can be done by forming a draft of the edited version of the deed and having it signed by all the partners under the Stamp Act. It can be legally validated by registering it with the Registrar of Firms.
I hope, now you are very well known with the importance of partnership deed.