A partnership deed states the understanding between an owner and an acquiring buyer. When there are more than two partners in a business transaction, the prescription of a written agreement, known as a partnership deed, defines shares for profit and loss. The partnership agreement of these business partners is generally said to be a partnership firm.

By having a partnership deed, it will fulfill the legal obligations of a partner toward the firm. There is no registration requirement for partnership deeds as they can be used in any manner.

Merits of a Well-Constructed Partnership Deed:

• It adjusts and balances the privileges, duties, and responsibilities of all partners.
• Prevention of Embarrassment and Mischievous Misinterpretation between partners because the terms of the alliance are pre-contracted.
• Clearing up confusion that can arise during disputes amongst associates by referring to terms mentioned in the deed.
• Demystifies uncertainties about profit-loss ratios among partners.
• Describes explicitly the precise jobs to be done with each partner having a very clear job description.
• Articles of Partnership Deed simplify the remuneration of partners and interests of partners who are capital investors.

It is advisable to have a well-drafted partnership deed rather than relying on oral agreements.