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Partnership Deed Drafting

The deed is written while everyone gets along and read only when they stop. That is exactly why the template version causes trouble.

What the deed actually decides

A partnership deed governs how profits are shared, how decisions get made, what happens when a partner wants out, and what happens when one dies. When partners disagree, this is the only document anyone reads.

Most deeds are downloaded, names filled in, signed and filed away. That works until it does not. The gaps we see most are profit sharing that no longer matches how the work is divided, and no exit mechanism at all — which turns an ordinary disagreement into a deadlock.

Settle these before signing

  • Profit and loss sharing, and whether it tracks capital or effort. Equal capital does not always mean equal work.
  • Capital contribution and what happens if one partner puts in more later.
  • Who can bind the firm. In a partnership every partner can generally bind the others, which is exactly why this needs limiting in writing.
  • Salary or remuneration to working partners, which also has tax consequences.
  • Admission and retirement — how a partner joins or leaves and how their share is valued.
  • Death or incapacity, and whether the firm continues.
  • Dispute resolution, so a disagreement has a route that is not court.

Written 5 September 2026. Government requirements and portal behaviour change — message us to confirm before you rely on any date or figure here.

Unlimited liability is the thing to understand

In a partnership, partners are personally liable for the firm's debts — and jointly, which means a creditor can pursue any partner for the whole amount, not just their share.

That is the single biggest difference from an LLP or a company, and it is worth being deliberate about. If the business is taking credit or signing contracts of any size, the structure question deserves a proper look before the deed is drafted. See converting to an LLP.

Common questions

Registration is not compulsory everywhere, but an unregistered firm cannot enforce its contracts in court, which is a serious practical limitation. See our page on registered versus unregistered firms.

Yes, by a supplementary deed signed by all partners. Easier while everyone agrees, which is an argument for getting it right early.

It varies by state and by the capital involved. We will tell you the Madhya Pradesh figure before you sign.

For two aligned partners with a simple business, often not. It becomes a problem the moment contributions are unequal, someone wants out, or there is real money involved.

Send us your case

Tell us how many partners, how the money and work are split, and what the business does.

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