Partnership Deed: Avoiding Future Disputes

by  Adv. Anamika Chauhan  




3 mins


Partnership deed: Is your easy way out in avoiding future disputes

There are times when people are very keen on investing and making the most out of the resources they have, they can be scenario by one of your friends might be well versed with accounting knowledge whereas you have some good knowledge about market research and functionalities. Maybe you decide on bringing your area of expertise together and work in a partnership. Partnership to a layman is two people coming together with common goals and objectives and at the end of it share the results in the agreed proportion. A partnership can be regarded as one of the most important this is organisations as India is still in the developing phase of adapting to the culture of business giants operating massively.

Definition of partnership and partnership deed

To the Indian partnership act, 1932 partnership can be regarded as “the relation between two or more people who have agreed to share the profits of a business carried on by all or any one of them acting for all” So it is not required if a member or a partner is an active participant of a partnership film food stop he or she can be dormant or in some situations a minor can be a partner in the firm.

To make sure all the laws and technicalities of your future working relationships are jotted down in writing, a partnership deed is prepared. A partnership can have a written or an oral deed but to make it enforceable by a quote of law and have a better understanding of future consequences, is it indeed is always preferred over an oral one. So a partnership deed can be regarded as a written document that is duly signed by all the partners agreeing upon certain terms and conditions. Having a good partnership deed not only avoids the hassle for the future but also acts as a guideline of dictating what is expected out of a partner. A partnership deed definition is self-explanatory and one needs to abide by its core and the true nature of it.

Don't Leave Your Partnership to Chance! Safeguard Your Business with a Partnership Deed

Main characteristics of a partnership

There are three main characteristics of a partnership

  • It is a contractual relationship where parties are related by specific performance on their part. If that is not delivered legal action can be prompted.
  • Involves two or more individuals, if it involves just one person it will become a sole proprietary, not a partnership firm.
  • There has to be sharing of profit and losses in any partnership. Without this, no partnership firm can be considered a business. It will rather be called a charity or a special relation that does not include a partnership.

What are the benefits that people can reap if they have a written partnership deed?

  • Helps in avoiding all and any future disputes between partners
  • Gives a road map to all the individual partners in regards to their responsibilities if they weren’t clear earlier.
  • Helps in controlling monitoring and bringing into action all the rights responsibilities and liabilities of all or any partners.
  • Nuances related to profit and loss sharing can be discussed in detail in a good partnership deed.
  • Although a partnership firm is based on profit sharing not on a salary basis but if there’s any partner in the firm who has been promised a specific amount of salary that can be discussed in the partnership deed as well.

    Protect Your Business with a Written Partnership Deed

What are some of the major partnership deed contents?

If you along with your partners have agreed upon getting a partnership deed made and registered then the following should be your partnership deed contents:

  • Name of the firm.
  • Name and all the details related to partners in the firm.
  • The date on which you decide on commencing your business
  • Duration of the existence of the firm
  • A detailed description of all the capital contributed by each partner
  • A detailed description of the profit-sharing ratio between the partners
  • Obligations responsibilities and powers in regards to all the partners in the firm.
  • Salary or Commission if any agreed upon
  • All the processes and nuances related to admission or retirement of a partner
  • The process involved in the calculation of goodwill
  • Dispute resolution procedure in case of any future dispute.
  • Procedure to be followed in cases where one or all of the partners become insolvent
  • Procedure to be followed in the case of dissolution of the firm.

    Avoid Future Disputes? Get a Partnership Deed for Your Business Now!


If you have the same objectives or goals for the future and you want to read the benefits of each other’s expertise, there is no other way of coming together and work than a partnership. There are many businesses all across the world that are functioning and have their ways cemented with the help of a partnership firm. You can have different types of partnerships such as an active partner, dormant partner, partner by estoppel, minor partner, partner for capital and many more. The bottom line is whatever may be the agreed working style in between you two may be the end result should be the benefit of the firm and reaping profits. If the end results and goals are attained by a good partnership, then people should go ahead with getting themselves registered and preparing a good partnership deed.

Want to ensure that there are no disputes in the future with your firm's other partners? Make sure you consult a lawyer to draft a partnership deed.

Adv. Anamika Chauhan

Adv. Anamika Chauhan


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Advocate Anamika Chauhan has been practising law independently for the last 5 years, during which she has gained extensive experience in handling cases. She offers legal consultancy and advisory services with a focus on achieving ethical and professional results. In addition, her excellent communication skills allow her to articulate arguments persuasively in both written and verbal forms.

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