Partnership is a lawful affiliation that exists between two or more persons in order to carry on a business on mutual terms. Business can be an occupation, trade or profession that carries on by two or more persons with mutual consent in order to share profit and loss equally according to their investment. In order to diminish the chances of conflicts, it is necessary to prepare a partnership deed to address rights, duties, responsibilities and profit as well as loss share of each partner. Written partnership deed will help you to solve all problems smoothly without any major problem. Partnership deed is an important document because once you have agreed to its term and conditions then you will be bound to follow them till the dissolution of partnership. It is an essential requirement of a partnership business and you can write it personally without the help of any lawyer.
Here is preview of this Partnership Agreement Template created using Microsoft Word,
Key Elements of Partnership Deed
Partnership deed is designed to protect the interest and rights of all business partners therefore it is necessary to write it in the favor of all parties. It should be signed by all partners and following are important elements of partnership deed:
Date of Agreement:
- Do not forget to write the date on which the agreement was signed because it is one of the important elements of the partnership deed.
Description of Partners:
- Describe how this partnership is beneficial for each partner and describe the process through which each partner get benefits according to his/her share.
- Write age of all partners with legal proofs to indicate that all individuals are mature to take their own decisions.
- Write name of the business and briefly explain nature of your business.
- It is necessary to make sure that there is no legal or social conflict with an existing company name.
- You have to make sure that you understand the structure and logistics of your organization and this should be done before the registration of your company name.
- Develop all instructions about the name of organization after the death of partner(s).
Term of Partnership:
It is necessary to address all possible questions such as:
- Duration of partnership (When does it start and for how much period of time).
- Termination date of partnership and the process to distribute all assets and liabilities among partners.
- Possible solutions in case of breach of any terms of partnership deed.
- In case of partnership dissolution, who will keep the name of business?
Location of Business:
- Mutually decide the location of your headquarters and your servicing area.
- Make sure to consider the proximity of each partner while deciding the location of your business.
- Address all travelling need and cost of your business in the partnership deed in order to avoid any future conflict.
Business Purpose of Partnership:
- Describe legit business activities, provisions for future changes in business activities and explain limitations of all business activities.
Capital Contributions from Each Partner:
- It is necessary to clearly state the form of capital such as cash, asset, vehicle etc.
- Write the percentage of contribution of all partners in order to share profits and loss equally in order to avoid any future conflict.
- Write specific dates when these contributions will be delivered and it is also important to take notes about non monetary contribution and its interest.
- Write all provisions for married and diet partners in order to distribute their share of profit and loss.
- Do not forget to write the provisions for the repayment of debt (if any).
Operational Contribution from Each Partner:
- Write details of role for which each partner is responsible on regular basis.
- Write the name of cheque signing authority and controller of financial records. Discuss the disclosure process for other partner(s).
- Write name of the person(s) who will take recruitment and termination decisions, marketing decisions and purchase decisions (capital and non capital).
Compensation of Partners
- Clearly discuss the compensation package for each partner along with allocation of perks, personal expenses and use of company’s property.
- Clearly explain the process that should be followed in case of disagreement.
- List the name of mediator who is empowered to take binding decision.
- Mention the name of person who will choose the venue in case of legal action.