Introduction To Business Lec 5

Partnership Deed LECTURE # 5

Partnership agreement in writing Is called partnership deed.

 It forms the basis of formation of the partnership  It defines the mutual rights, duties & liabilities of the partners.  It help in minimizing the areas of disputes among the partners.  It serves as guidepost for the conduct of firm business.

1. 2. 3. 4. 5. 6.

Name & location of the business The nature of the business The amount of capital to be contributed by each partner. Provisions of reinvestments in business. The duties, power & obligations of all the partners. Length or life of the business.

1. The method of distribution of profit & sharing of losses. 2. Method of admitting a new partner. 3. Procedure for withdrawal of a partner. 4. The method of revaluation of goodwill on admission or retirement or death of a partner. 5. Procedure to be followed for in case a partner for managing the firm. 6. Arrangements to be followed in case a partner becomes insolvent.

1. Salary, if any, payable to the 3. 4. 5. 6.

partners for managing the firm. The method of preparing accounts & arrangement for audit. Procedure for the dissolution of the firm & settlement of accounts. Arbitration in case of disputes among partners. Operation of bank account.

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Common advantage Indemnity Loss caused by wilful neglect. Due diligence Provision of information

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Right to take part in management Expression of opinion Inspection of books Right to be indemnified Right to continue • Right to retire Use of property • Interest on capital Sharing of profit/loss

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Joint liability Liability of a new partner Liability of retiring partner Competitive business No private use of property

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Admission of a new partner Retirement of a partner Insolvency of a partner Death of a partner

• A minor can’t be a partner • A minor can be admitted to the benefits of partnership alone • Rights of a minor in a firm • Liability of a minor

Within 6 months of his attaining majority, he has to give notice: ii. Whether he wishes to continue as a partner or not. iii. In case he doesn’t make such announcement, he will be treated as decided to continue as a powerful fledged partner iv. When he chosen to become partner or is deemed to be partner his liability becomes unlimited with effect from the date of his admission as such.