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Section 44

Partnership deed

Use it when two or more people start a business together as a partnership firm and want the terms in writing.

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Template for general guidance; not legal advice. Check stamp duty and registration rules in your state. PARTNERSHIP DEED This Partnership Deed is made at Place of signing on Date of deed between: 1. First partner: full name, son/daughter of First partner: father's or mother's name, aged First partner: age (years) years, living at First partner: home address (called "the First Partner"); and 2. Second partner: full name, son/daughter of Second partner: father's or mother's name, aged Second partner: age (years) years, living at Second partner: home address (called "the Second Partner"). The partners have agreed to carry on business together in partnership on the following terms. 1. Name. The business will be carried on under the firm name Name of the firm. 2. Business. The firm will carry on the business of Nature of business, and any other lawful business that all partners agree to in writing. 3. Place of business. The principal place of business will be Principal place of business. The firm may open other places of business if all partners agree. 4. Start and duration. The partnership starts on Partnership starts on. It is a partnership at will and will continue until it is ended under clause 14. 5. Capital. The First Partner brings ₹First partner: capital (₹) and the Second Partner brings ₹Second partner: capital (₹) as capital. Further capital will be brought only with the written consent of all partners. 6. Profit and loss. After paying all expenses, salaries and interest under this deed, the net profit or loss of each accounting year will be shared as follows: First Partner First partner: profit and loss share (%)%, Second Partner Second partner: profit and loss share (%)%. 7. Salary. Each partner who works actively in the business may draw a monthly salary of ₹Monthly salary per working partner (₹, or nil). This salary is an expense of the firm. 8. Interest on capital. Interest on capital will be paid at Interest on capital (% per year, or nil)% per year, and only out of profits. 9. Bank account. The firm will keep its account with Bank and branch for the firm's account. Cheques and payments will be signed by Who signs cheques and payments. 10. Books of account. Proper books of account will be kept at the principal place of business. Every partner may inspect and copy them at any time. The accounts will be closed on Accounts closed every year on every year and signed by all partners. 11. Duties of partners. Every partner will: (a) give time and attention to the business and work for the common benefit of the firm; (b) be just and faithful to the other partners; (c) give true accounts and full information about anything that affects the firm; (d) not carry on any business that competes with the firm without the written consent of the other partners; (e) not use the firm's money or property for personal purposes. 12. Things that need everyone's written consent. No partner will, without the written consent of all the other partners: (a) stand as guarantor or surety in the name of the firm; (b) borrow or lend money in the name of the firm, other than in the normal course of business; (c) sell, transfer or mortgage his or her share in the firm; (d) bring in a new partner. 13. New partner. A new partner may join only with the written consent of all partners, on terms recorded in a supplementary deed. 14. Retirement and ending of the partnership. (a) A partner may retire by giving Notice to retire (months) months' written notice to the other partners. (b) The partnership may be dissolved at any time by written agreement of all partners. (c) If a partner dies, the remaining partners may continue the business. The legal heirs of the deceased partner will be paid his or her share as shown in the accounts drawn up to the date of death. 15. Settlement of accounts. On retirement or dissolution, the accounts will be settled in this order: first, debts owed to outsiders; second, loans given by partners to the firm; third, each partner's capital; and the balance, if any, in the profit-sharing ratio in clause 6. 16. Disputes. The partners will first try to settle any dispute by discussion. If it is not settled within 30 days, it will be referred to a sole arbitrator chosen by the partners together. The place of arbitration will be City for arbitration of disputes. 17. Registration. The partners will apply to register the firm with the Registrar of Firms of the state. 18. Other matters. Any matter not covered by this deed will be governed by the Indian Partnership Act, 1932. Signed by the partners on the date and at the place written above. First Partner: ______________________ (First partner: full name) Second Partner: ______________________ (Second partner: full name) Witnesses: 1. Name: Witness 1: name Address: Witness 1: address Signature: ______________________ 2. Name: Witness 2: name Address: Witness 2: address Signature: ______________________

Know before you sign

  • Print the deed on non-judicial stamp paper (or e-stamp) of the value your state charges for a partnership deed. Stamp duty differs from state to state, so check with your state's registration and stamps department.
  • All partners must sign every page. Two witnesses with names and addresses are usual practice.
  • Section 4 of the Indian Partnership Act, 1932 defines a partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
  • If the deed is silent, section 13 of the Act applies: partners share profits and losses equally and no partner gets a salary. Write your own terms clearly if you want something different.
  • Registering the firm is not compulsory: section 58 says it may be done at any time with the Registrar of Firms. But under section 69, an unregistered firm cannot file a suit against a third party to enforce a contract, and a partner cannot sue the firm or other partners to enforce rights under the contract. Most firms register for this reason.
  • Ask a chartered accountant how income tax will treat the partner salary and interest on capital before you fix the numbers in clauses 7 and 8.
  • After signing, apply for the firm's PAN, open the bank account in the firm's name, and register for GST if your business needs it.
  • See a lawyer if a partner brings land or a building as capital, if one partner will be a sleeping partner, or if the partners are relatives with a family property involved.
Sources (2)
  1. The Indian Partnership Act, 1932 (Act No. 9 of 1932): sections 4, 13, 58 and 69 · 1932
  2. The Indian Contract Act, 1872 (Act No. 9 of 1872): sections 10 and 27 · 1872

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