Legal agreement between two or more partners forming a business partnership — defines profit sharing, roles, and responsibilities.
Registrar of Firms (for registration) of the state where firm's principal office is located.
Partnership at will — dissolution at any time. Fixed-term — as per deed. Disputes within 3 years.
This coverage is provided by a practicing advocate. Specific sections cited depend on the facts you provide during drafting.
A Partnership Deed is a written agreement between two or more persons (partners) who agree to carry on a business together with a view to profit, sharing profits and losses in agreed proportions. It is the foundational document of a Partnership Firm under the Indian Partnership Act, 1932, defining each partner's rights, duties, profit-sharing ratio, capital contribution, and exit provisions.
Execute a Partnership Deed when starting a business with one or more partners. While an oral partnership is legally valid under the Indian Partnership Act, 1932, a written deed is essential for: clarity on roles and profit-sharing, registration with the Registrar of Firms, opening a business bank account, applying for business licences/GST registration, and protecting partners in case of disputes.
The Indian Partnership Act, 1932 governs partnerships in India. Section 4 defines partnership. Section 58 provides for optional registration with the Registrar of Firms — while registration is not mandatory, an unregistered firm has significant disabilities (Section 69 — cannot sue third parties in its own name). The Partnership Act does not impose a cap on the number of partners (Companies Act limit of 50 partners applies for banking firms). LLP Act, 2008 governs Limited Liability Partnerships, which may be more suitable for professional practices.
Without a partnership deed, the terms of the Indian Partnership Act, 1932 apply by default — including equal profit sharing (regardless of capital contribution) and equal management rights. This can lead to disputes. Unregistered firms cannot file suits to enforce their rights against third parties.
No, registration with the Registrar of Firms is optional under the Indian Partnership Act, 1932. However, an unregistered firm cannot sue third parties to enforce a right arising from a contract (Section 69). Partners also cannot sue each other to enforce rights under the deed.
The Indian Partnership Act itself does not limit the number of partners, but the Companies Act, 2013 limits partnerships to 50 members (for non-banking firms). For banking businesses, the limit is 10 partners.
In a Partnership, partners have unlimited personal liability for the firm's debts. In an LLP (Limited Liability Partnership under the LLP Act, 2008), partners' liability is limited to their agreed contribution. LLPs also have separate legal identity (can sue and be sued in their own name). LLPs are registered with the Ministry of Corporate Affairs (MCA).
Under the default provisions of the Indian Partnership Act, a firm is dissolved on the death of a partner (Section 42). However, the partnership deed can include a 'continuation clause' allowing the remaining partners to continue the firm.
A minor cannot be a partner (full partner) due to incapacity to contract. However, under Section 30 of the Partnership Act, a minor can be admitted to the benefits of an existing partnership — sharing profits but not liable for losses.
The partnership deed should specify the valuation mechanism for a retiring partner's share — typically goodwill (often calculated as a multiple of average profits), fixed assets, and working capital as of the retirement date. Without a deed clause, this is a common source of disputes.
A sleeping (dormant) partner contributes capital but does not participate in management. They share profits and losses per the agreed ratio. They are fully liable for the firm's debts to third parties (unlike in an LLP). Their rights should be clearly defined in the partnership deed.
Yes. By written agreement of all partners, a partnership deed can be amended — to change profit-sharing ratios, add new partners, alter capital contributions, or modify any other terms. For registered firms, the amendment must also be registered with the Registrar of Firms.
Please confirm all of the following before proceeding with your Partnership Deed document:
Please confirm all eligibility conditions above to proceed. If you are unsure about any point, you may not be eligible for this type of notice.