After reading this article you will learn about:- 1. Meaning of Partnership Deed 2. Contents of a Partnership Deed 3. Rules to be Followed in the Absence of a Partnership Deed.

Meaning of Partnership Deed:

The partnership comes in existence by an agreement. The agreement may be written or oral. But it is advisable that a Partnership Agreement or Partnership Deed is drawn up and signed by the partners. The neglect of this precaution has shortened the life of many partnership firms. When the partnership agreement is written and signer by all the partners, it is called Partnership Deed or Articles of Partnership.

The partnership deed is not a public document like the Memorandum of Association of a company.

Contents of a Partnership Deed:

The partnership deed must contain the following particulars:


1. The name of the firm.

2. The names and addresses of the partners.

3. The nature of the business.

4. The term or duration of partnership.


5. The amount of capital to be contributed by each partner.

6. The drawings that can be made by each partner.

7. The interest to be allowed on capital and charged on drawings.

8. Rights of partners.


9. Duties of partners.

10. Remuneration to partners.

11. The ratio in which the profits or losses are to be shared among the partners.

12. The basis for the calculation of goodwill at the time of admission, retirement and death of a partner.


13. The keeping of proper books of accounts and the preparation of Balance Sheet.

14. Settlement of amount on the dissolution of the firm.

15. The procedure to be adopted in case of disputes among the partners.

Rules to be Followed in the Absence of a Partnership Deed:

In the absence of a partnership deed, the following rules have to be followed:


1. The partners are entitled to share the profits or losses equally.

2. Partners are not entitled to interest on their capital.

3. No partner will be allowed salary, or any other remuneration for any extra work done for the firm.

4. No interest will be charged on partners’ drawings.


5. Interest at 6 per cent per annum will be allowed to partners on any loan given to the firm by them.

6. Every partner has a right to take part in the working of the partnership business.

7. No person can be admitted into the firm without the consent of all the existing partners.

8. Every partner should use the partnership property for the benefit of the firm.


9. Every partner has a right to inspect the books of accounts of the firm.