Saturday, August 9, 2014

Partnership Deed

Before starting a partnership business, all the partners have to draw up a legal document called a Partnership Deed of Agreement.

It usually contains the following information:

Names of included parties - includes all names of people participating in this contract
Commencement of partnership- includes when the partnership should begin. The date of the contract is assumed as this date, if none is given.
Duration of partnership - includes how long the partnership should last. It is automatically assumed that the death of one of the contracting parties breaks the contract, unless otherwise stated.
Business to be done - includes exactly what will be done in this partnership. This section should be very particular to avoid confusion and loopholes.
Name of firm - includes the name of the business entity.
Initial investments - includes how much each partner will invest immediately or by installments.
Division of profits and losses - includes what percentages of profits and losses each partner will receive. If it is not a limited partnership, then there is unlimited liability (each partner is responsible for all partners' debts, including their own).
Ending of the business - includes what happens when the business winds down. Usually this includes three parts: 1) All assets are turned into cash and divided among the members in a certain proportion; 2) one partner may purchase the others' shares at their value; 3) all property is divided among the members in their proper proportions.
Date of writing - includes simply the date that the contract was written.