Question

What is partnership deed?

Hint:

A partnership deed protects partners by clearly defining rights, duties and profit-sharing rules.

Answer 1

A partnership deed is a written legal document that contains the terms and conditions agreed upon by all partners of a firm. It clearly defines the rights, duties, responsibilities and profit-sharing arrangements among partners. The deed helps in avoiding disputes by providing clarity on important matters such as capital contributions, interest on capital, loan terms, salary, admission or retirement of partners, and settlement procedures. It acts as evidence in case of disagreements and ensures smooth functioning of the partnership. A written deed is always preferable to avoid misunderstandings and to maintain transparency in the business.