Q.In the absence of an agreement, interest on loan advanced by the partner to the firm is allowed at the rate of ______.

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).

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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 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 …

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, prof …