Since Partnership is the Outcome of an Agreement , it is Essential that there must be some Terms and Conditions Agreed Upon by All the Partners. Such Terms and Conditions may be either Oral or Written . The Law does not make it Compulsory to have a Written Agreement. However, in order to Avoid All Misunderstanding and Disputes , it is always the Best Course to have a Written Agreement Duly Signed and Registered under the Act. Such a Written Document , which contains the Terms of Agreements is called “Partnership Deed”.
The Essential Clauses of a Partnership Deed are :
- The Name and Address of the Firm .
- Name and Addresses of the Partners .
- The Type and Nature of the Business the Firm Proposes to do .
- Amount of Capital to be Contributed by Each Partner and Whether the Capital Accounts will be Fixed or Fluctuating .
- Interest on Capital : Whether Interest is to be Allowed on Capitals . If so , The Rate of Interest .
- Drawings : How much Amount the Partners are Entitled to Withdraw for Personal Use .
- Interest on Drawings : Whether Interest will be Charged on Partner’s Drawings . If so , the Rate of Interest .
- Profit Sharing Ratio : The Ratio in which Profits or Losses are to be Divided among Partners
