Final answer:
A partnership deed is a legal document that outlines the terms and conditions of a partnership agreement, including the names of partners, capital contributions, profit-sharing ratios, and more.
Step-by-step explanation:
A partnership deed is a legal document that outlines the terms and conditions of a partnership agreement. It typically includes the following elements:
- Names of Partners: The names and addresses of all the partners involved in the partnership.
- Nature of Business: A description of the business activities that the partnership will engage in.
- Capital Contributions: The amount of money or other assets that each partner will contribute to the partnership.
- Profit Sharing Ratios: The percentage of profits that each partner will be entitled to.
- Authority and Decision-Making: The roles and responsibilities of each partner, including how decisions will be made and how authority will be exercised.
- Distribution of Assets: The process for distributing assets and dividing the partnership's property in the event of dissolution.
- Admission and Retirement of Partners: The procedure for admitting new partners to the partnership and the process for retiring partners.
- Dispute Resolution: The method for resolving disputes that may arise between partners.
A partnership deed is important as it legally binds the partners to the terms of the agreement and helps in avoiding misunderstandings or disputes in the future.