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Where more than one person get united and carry on a business
by agreement or contract, for those business the partnership act
was established in the year, 1932,in the Bengal Bharat
Subcontinent. In our country all partnership business are formed,
conducted, and controlled by Partnership Act, 1932.The
partnership business is established on the basis o contract. The
key of partnership established on the basis of contract is mutual
confidence and final belief among the partners themselves.

That means Partnership is a contract between two or more

persons to invest their money and effects and to utilize their labor
and skill or some or all of them in lawful commerce or industry
and to divide the profits and share loss in certain proportions.

Section 4 of the Partnership Act of 1932 defines partnership as

the relation between persons who have agreed o share the profits
of a business carried on y all or any of them acting for all .Persons
who have entered into partnership with one another are called
individually partners and collectively a firm, and the name under
which their business is carried is called the firm name.

To define, secure partners respective rights and obligations and to

refer the partnership or firm as legal entity a legal draft of deed of
partnership is essential.


The document in which the respective rights and obligations of

the members of a partnership are set forth is called Partnership
Deed. A partnership is created by agreement amongst the
partners in the business particular or general. The agreement to
carry on business in partnership may be oral or written. Generally,
where the business is large, the partnership agreement is reduced
into writing.

If it is in writing, the terms by which it is to be governed are

embodied or incorporated into a written document. This written
document is called Partnership Deed or the Articles of Partnership.
Partnership Deed usually contains exhaustive provisions regarding
matters concerning the business and the relationship between the


The following matters are generally included in the Partnership


1. Name of business;
2. Head office of business;
3. Location of business;

4.Objects and subject matters of business;

5.Name and address of the partners;
6.Firm name;
7.Nature of business;
8.Place of business and the business address;
9.Duration of the partnership business and the mode of
10. Mode of dissolution;
11. Amount of capital to be contributed by each partner;
12. The share of profits to be taken by each partners;
13. Mode of management;
14. The powers of partners:
15. Terms of a partners retirement;
16. Expulsion of partners;
17. Introduction of new partners etc.


Although a written agreement is not required by law to form a

partnership, it is vital to avoid uncertainty and to prevent
misunderstandings and disputes. Without a partnership deed the
actions, powers and rights of each partner are controlled by the
Partnership Act 1890. This does not offer solutions to many of the
problems that can arise and may not suit the way that you and
your partners want to work together. The Act is quite arbitrary
and the provisions may not always seem fair. For example, the
Partnership Act 1890 states that partners are entitled to share
equally in the capital and profits of the business. But, if one
partner has put more time or capital into the business than the
other(s), you probably wouldn't want to share profits equally.

Also under this Act, a partner can withdraw immediately, without

giving notice. This could be awkward because they may insist on

the return of their capital contribution, which may force the

business to close down. This is why a written agreement is so


This DEED OF PARTNERSHIP is made on this the 20th day of

February, 2014


MD. MOSTAFA KAMAL, son of Sharif Kamal, 271 Elephant Road,

New Market, Dhaka 1205,hearinafter referred to as the first party
which expression shall unless excluded by or repugnant to the
context , mean and include his successors in interest, nominees,
legal representatives , administrators and assigns of the one


MD. IQBAL HOSSAIN, son of Khorshed Alam, 146/3,Baily

road,Ramna,Dhaka 1000,hereinafter referred to as the second
party which expression shall unless excluded by or repugnant to
the context, mean and include his heirs, successors, legal
representatives, administrators and assigns of the other part.

WHEREAS the parties hereto have agreed to form a partnership

firm under the name and style of NUPUR GRILL AND

AND WHWREAS the parties have agreed that after forming the
partnership concern the said firm shall be registered with the
appropriate authorities;

AND WHEREAS the parties have mutually agreed to the terms and
conditions of the said partnership as stated hereinafter;



1. That the parties hereto hereby form a partnership.

2. That the partnership concern shall be named and called as
3. That the partnership concern agreement shall be for at least
five years.
4. That the partnership firm shall have its place of business at
Joynag Road, Bakshi Bazar, Dhaka-1210.
5. That the initial capital of the firm shall be tk 3000000(taka
three millions) only. The parties will contribute in the capital
as follows:

Party Percents (%) Amount

FIRST PARTY 60% Tk 1800000(1.8
million) only
SECOND 40% Tk 1200000(1.2
PARTY million) only

6. That the partnership firm shall carry on the business of

selling of all types of jewelleries.
7. That an account shall be opened with any scheduled bank
in the name of the partnership firm and the said account
will be operated by joint signatures of the partners.
8. That the partners can authorize any person on their behalf
to operate the bank account and as such to sign cheques
due to sickness, overseas trip etc.

9. The partners shall share the loss and profit after deducting
all expenses of the store; Gas/Electric/Water bills, raw
materials costs, employee salary, vat etc. as follows;
a) FIRST PARTY : 60%
10. That the partners shall make a list of all materials which
belong to the parties.
11. That the partners shall fix a minimum rent and salary
after one year depending on the business position.
12. That the partners shall spend all necessary expenses
from now on.
13. That the ANIK AHMED, son of Habibur Rahman shall
be in charge of the total management and administrations
of the stores.
14. That this partnership is not as will. In the event of
demise of any partner this partnerships will not be dissolved
and one of the heir of the deceased partner shall become a
partner in the place of the deceased partner .If there is
more than one heir then the heir will nominate one of them
who will become a partner upon approval of the surviving
15. That at the end of each financial year the profit and loss
account of the business shall be shared and distributed by
and between the partners in the ratio aforementioned.
16. That in case of any differences or disputes with the
interpretation or implementation of the terms and
conditions of the partnership agreement, the same shall be
resolved by meditation failing which the dispute shall be
referred to and decided by a sole a arbitrator appointed by
the partners and the decision shall be binding. The
arbitration shall be conducted in accordance with the
provision of the ARBITRATI0N ACT, 2001


February 2014






Section 6 of the Partnership Act, 1932 lays down that In

determining whether a group of persons is or is not a firm or
whether a person is or is not a partner in a firm regard shall be
had to the real relation between the parties, as shown by all

relevant facts taken together. If all the relevant facts are

analyzed and if it is found that all the essential element of
partnership (i.e. two or more persons enter into contract, sharing
of profits and persons carrying n business in partnership are
agents as well as principals) are present, only then the group of
persons carrying on the business will be called a partnership. The
second element out of the three elements, namely sharing of
profits is very significant, but it is not crucial. Profits of a business
may be shared even under circumstances where there is no
existence of partnership.

The Partnership Act lays down some exceptions where the sharing
of profits is not a crucial determinant of the existence of the

1. If a person engaged in business borrows money from a

lender on condition that the latter will accept a share of the
profits out of the business instead of interests, in that case
the lender will not thereby become a partner.
2. An employee-receiving bonus as remuneration will not
considered as a partner.
3. If a share of profits is given to the widow or child of a
deceased partner as annuity widow or the child of a
deceased partner as enmity delete the widow or the child in
that case will not become a partner.
4. If a previous owner or partner of a business is given some
money as share of profit arising from the sale of goodwill the
owner or the partner in that case will not be considered as
partner. In all the above cases of examples it is found that
one essential element of partnership is lacking. This element
is agency. That is a creditor or an employee, or the widow or
child of a deceased partner can not bined the firm by any act
done on the half of the firm. Those who have the authority to
bind the firm by their acts can only become partners i.e.

those having authority in binding the firm or its partners by

their acts can only be called partners.

The probes of determining the existence of a true partnership

were first led down by the House of Lords in England in the case
of Cox VS Hichman. The summary of the case is that here a
debtor transferred his business to some trustees with directives
that they will carry on the business and use the profits in payment
to his creditors. In the case it was held that the creditors are were
not partners of the business. The rule led down in this case has
been comprehensively inserted in section 6 of the Partnership Act
Bangladesh. In determining the existence of partnership by the
court, the circumstances, which are taken into consideration by
the court, are discussed:

1. The terms of the agreement, if any ,

2. the conduct f the partners,
3. the mode of going business,
4. who controls the property,
5. the mode of keeping accounts,
6. The manner of distribution of profits, etc.

As regards the sharing of losses of the partnership business- it is

not a test of existence of partnership. It is rather a consequence
of partnership. Losses are not referred to to in the definition of
partnership (section 4).

But in determining the existence of a partnership by the court, it

takes into account as to how the losses are shared. In a case
(Ragenandan VS Hormasji) it was held that partners may
agree that one or more of them shall not be liable for losses. But
such an agreement will be binding only among themselves. All the
partners will be liable to the third parties for the debts of the firm.


There may be various types of partners in the partnership firm

which are as follows:

1. Active or actual partner:

Partners who take an active part in the conduct of the
partnership business are called actual or ostensible partners.
They are full pledge in real sense of the term. Such a partner
must be public notice of his retirement from the firm in order
to free himself from liability for acts after retirement.

2. Sleeping or dormant partners:

There are persons who merely put in their capital (or even
without capital) they may become partners and do not take
active part in the conduct of the partnership business. They
are known as sleeping or dormant partners. They do share
profits and losses usually less than proportionately; they are
liable to third party for all the acts of the firm just like an
undisclosed principal. But not required to give public notice
of their retirements.

3. Silent Partner:
Those who buy agreement with other partner have no voice
in the management of the partnership business are called
silent partners. They shares profits and losses, are fully liable
for the debts of the firm and may take active part in the
conduct of the business.

4. Partners in Profits only:


A partner who has stipulated with other partners that he will

be entitled to a certain share of profit, without being liable
for the losses, is known as partners in profits only.

5. Sub partners:
When a partner agrees to share of profit in a partnership
form with an outsider, such an outsider is called a sub
partner. He has no rights against the firm nor is he liable for
the debts of the firm.

6. Partner by estopple:
If a person represents to the outside world by words spoken
or written or by his conduct or lending his name that he is a
partner in a certain partnership firm, he is than stopped from
denying his being partner, and is liable is a partner to
anyone who has on the faith of such a representation
granted credit to the firm. Actually such a person not a
partner of such firm-no credit of the firm.

The Structure of a Business Partnership

The legal status of a traditional partnership is similar to that of a
sole trader and is a simple and flexible way to run a business.
Partnerships are not registered at Companies House nor do they
have any obligations to maintain statutory records, prepare and
file accounts or submit annual returns. Of course, a partnership
will still need to maintain adequate records to function effectively
and meet their tax obligation.

The partners decide how they want to run the business. Typically,
partners in a partnership share the responsibilities and profits and
losses equally but there is no law which states that partnerships
must be run in this manner. The partners are self-employed and
each of the partner's business income is counted alongside their
existing personal income, so the accounting side of the
partnership is relatively straightforward.

Unlike shareholders in a limited company or partners in a limited

liability partnership, the members of a traditional partnership
have no financial protection if the business runs into trouble. If
the partnership has debts, the partners are jointly liable for any
amounts owed and so are equally responsible for paying off the
whole debt. Creditors can claim a partner's personal assets
(home, money etc) to pay off any debts - even those debts
caused by other partners.

Partnerships can be particularly useful for small businesses run by

couples. In fact, if an unmarried couple run a business together
then setting the business up as a partnership safeguards each
partner's interest in the business should their personal
relationship end.

As far as taxes go, a partnership is relatively straightforward.

Each partner needs to register with the HMRC as self-employed
and for self-assessment. The partnership also has to be registered
with HMRC and an annual tax return filed. Profits from the
partnership are taxed as income, as per sole traders. Unlike sole
traders, however, the partners and the partnership each have to
be registered for National Insurance and pay NICs. If the
partnership generates sufficient income a limited liability
company may be more tax efficient.

This kind of partnership model is common among firms of

solicitors, surveyors and accountants although more and more
practices within these professions are converting to or starting up

Limited Liability Partnerships

An LLP is an alternative partnership structure with the benefits of

limited liability. Two or more people associated for carrying on a
lawful business with a view to profit can incorporate an LLP by
subscribing to its incorporation document. In law, 'person'
includes individuals and companies or firms. LLPs are not
applicable for all activities, for example, non-profit making
activities. Any new or existing partnership of two or more persons
can incorporate as an LLP.

The main difference between an LLP and a limited company is

that an LLP has the organisational flexibility of a traditional
partnership as opposed to the more rigid structure of a company
and is taxed as a partnership.

The LLP is a separate legal entity and, while the LLP itself is liable
for the full extent of its assets, the liability of the members is
limited. This is much safer for the partners, as they are not
personally liable for any losses.

On the other hand, an LLP requires:

registration with Companies House;

more strict (but not particularly difficult) administration to

meet Companies House rules;

annual publication of accounts.

In short, a limited liability partnership is a more formal

arrangement than a partnership due to the requirements of
Companies House but it does offer partners the protection of
limited liability while retaining the taxation benefits of a
partnership. It's relatively straightforward to convert an existing
business partnership to a limited liability partnership.

In general, the LLP seems a better option for most businesses

unless you are particularly confident about the risks (of losses or
claims) of a traditional partnership or have reservations about
revealing your accounts to the public (where your customers and
competitors can inspect them).



Partnership deed is of imminent importance as to dissolution of

partnership. Any provision, condition contingent or subsequent
maybe inserted in the deed of partnership to effect dissolution of
partnership. And after the happening of the before mentioned
matter the partnership is subject to dissolution with binding

Chandra VS Gopal Sheikh AIR (1912) 623

Also a partnership firm may be dissolute in any of the following


On the basis of contract;

By giving notice to other partners;
On the happening of contingent events
When the dissolution is compulsory under section 41 of
Partnership Act:
By the order of the court;


From the above discussion, we have observed that if by more

than one person a partnership agreement is created for
composing a partnership firm. Then that agreement is called
partnership deed. If any of the partners violate any condition of
the deed then he will be liable according that deed and the
concerned Partnership Act.

An Assignment
Partnership deed

Department of law University of Dhaka

Submitted to :
Pro. Liaquat Ali Siddiqui

Submitted by :
1. Md. Monir Hossain Roll (11)
2. Md. Habibur Rahman Roll (46)


1. Introduction 3
2. Partnership Deed 4
3. Catalogue Of Deed Of Partnership 4
4. Deed Of Partnership Template 5
5. Draft Of Partnership Deed 6

6. Probes Of Ascertaining The Existence Of Partnershipwith

Other Superfluous Matter 9

7. Partners In Partnership 11

8. The Structure Of A Business Partnership 13

9. Limited Liability Partnerships 14

10.Deed Of Partnership And Dissolutin Of Partnership 15

11.Conclusion 16