Mary moved in with her sister after her MBA program. She had shelved every thought of job-hunting, since her sister, Jane, contacted her about a possible partnership between them. Jane had a clothing outfit which she could not oversee properly because she had another day job with the government.

In less than three months of taking over, the business was transformed; revenue was coming in, profit was booming, and the customers were happy. Every month, Jane gave Mary a cheque, which was presumed to be her salary, but Mary wanted more. She wanted the profit to be shared with her.

She broached the topic with her sister, and that was the end of their partnership.

So, what went wrong? Partnership deed! None was in place at the inception of the business relationship. Mary knew about the need for one, she was MBA-trained after all, but she overlooked it probably because of her filial relationship with Jane.

Partnership deed, or partnership agreement, or articles of partnership, is a written contract duly signed by partners, which details the terms and conditions of the partnership. This is very important for every partnership business, regardless of previous affiliations between partners.

Issues addressed in the partnership deeds include and not limited to the following:

Name and nature of business
Name and address of partners
Right and duties of partners
Admission and retirement of partners
Duration of partnership
Capital of partners
Interest on capital
Limits of drawing and interest on drawing
Partners’ salary and commission
Arbitration clause
Death of a partner

‘Coming together is a beginning; keeping together is progress; working together is success.’ – Henry Ford. Every successful partnership has a well thought out partnership deed as a backdrop.

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