Q.What is a Partnership Deed? State any five contents of a Partnership Deed.

A partnership agreement in written form is called a Partnership Deed.

A partnership may be created by an oral or a written agreement. When the terms and conditions of the partnership — profit-sharing ratio, capital, interest on capital/drawings, salary, admission/retirement rules, etc. — are put down in writing and signed by all partners, the document is called a Partnership Deed (also called Articles of Partnership).

A written deed is preferred because it serves as documentary evidence and prevents future disputes. Where a deed is silent or absent, the provisions of the Indian Partnership Act, 1932 apply (e.g. equal profit sharing, no interest on capital, 6% p.a. interest on a partner's loan).

When the partnership deed is silent, the Indian Partnership Act, 1932 fixes interest on a partner's loan (advance) to the firm at 6% per annum.

If partners do not have an agreement (or the deed is silent on a point), the provisions of the Indian Partnership Act, 1932 apply by default. The important default rules are:

A loan given by a partner to the firm is treated differently from capital — it earns interest at 6% per annum even without an agreement, and this interest is a charge against profit (payable even if there is a loss). Hence the correct rate is 6%.

A partnership agreement in written form is called the Partnership Deed.

A partnership is founded on an agreement between the partners. This agreement can be oral or written, but to avoid future disputes it is usually reduced to writing, signed by all partners and stamped. Such a written document is called the Partnership Deed. It contains the terms of the partnership — name of firm, capital contributions, profit-sharing ratio, interest on capital/drawings, salary, etc.

The correct word is agreement — a Partnership Deed is a (usually written) agreement of partnership.

A partnership comes into existence through an agreement among persons who decide to carry on a business and share its profits. When this agreement is put in writing, the document is called the Partnership Deed. It records matters such as capital contributions, profit-sharing ratio, interest on capital/drawings, salaries and the rights and duties of partners.