What is a Partnership Deed?

Sometimes known as a deed of partnership, a partnership deed is a type of agreement between two business partners that helps to define the terms and conditions of the day to day operation of that partnership. Typically, the document also includes provisions that help to define which business partner receives what assets in the event that the partnership is dissolved at some point in the future. The scope of activities covered in a partnership deed will vary, based on the nature of the business organization involved and any local or national laws that may apply to business relationships within the local jurisdiction.

The partnership deed helps to create the ongoing operational relationship between the business partners. This includes identifying the rights and responsibilities that each partner is assuming as part of the overall agreement. Deeds often cover such key aspects as which partners will be actively engaged in the ongoing operation of the venture, and which will serve as silent partners. Voting rights based on total investment in the business are often accounted for within the terms and provisions. Even mundane details such as the identification of the primary address for the corporation, the designated roles of certain partners within the company structure, and how the partners are compensated for their efforts will also be addressed in different sections and clauses of the document.

When a partnership deed is properly structured, provisions for amending the document from time to time will also be included. This allows the partnership to adapt to changing circumstances within the marketplace or the economy in general. The process often includes instructions on how to propose, consider, and ultimately approve or reject possible amendments in an orderly manner that allows all partners the opportunity to discuss questions or concerns before participating in an actual vote.

Along with establishing the basic functions within a partnership, a partnership deed usually addresses issues related to changes in ownership or the dissolution of the partnership. This includes procedures that may be invoked should a partner die or wish to sell his or her interest in the business. The text of the document will also address how assets are divided among the partners in the event that the company is dissolved or shut down. Ideally, the deed will cover just about any contingency that may be represented during the life of the partnership, providing clear instructions in how to proceed with as little disruption as possible, up to and including the sale of the business or its assets to a new group of partners.