Growthify

Partnership AGREEMENT WITH GROWTHIFY

We know that every partnership is unique

At Growthify, we draft Partnership Agreements to fit your set-up, handling the details so you start strong. We know that every Partnership is unique, whether you team up with a friend on a small venture or join forces with colleagues for something bigger. Our goal is to create a document that feels right for your situation, one that grows with your business.

Growthify keeps drafting simple. First, you tell us about your Partnership details like partner names, business type, and special rules. We ask thoughtful questions to capture what you need, like how you want to handle votes on big decisions. Next, we write a draft with key sections: roles, finances, and exit plans. We build in flexibility where it counts, such as adjustable profit shares as your business evolves. Then, our team checks it for legal fit, using laws like the Indian Contract Act.

We spot any gaps and suggest fixes to make it stronger. If you want, we add notarization for strength. Finally, you get the agreement, ready to sign. You review and tweak it anytime to make it perfect. The whole thing usually wraps up in a few days, with you in the loop at every step. We even offer tips on discussing the draft with your partners to ensure everyone feels good about it.

We know Partnerships thrive on trust, and a good agreement builds that. Drafting alone might miss key points, but Growthify brings know-how to cover them. Whether you form a new team or update an old one, we deliver fast, solid Partnership Agreements. Clients across India appreciate the warmth and clarity we bring. One client shared how our Agreement helped their Tech Startup navigate a Partner buyout smoothly, saving them time and stress. Another loved how we made the process feel personal, not like filling out endless forms. We focus on real-life needs, drawing from years of helping folks like you. Plus, our platform lets you store and update agreements as your business changes, keeping things current without starting over.

Important clause of a Partnership Agreement

Partnership Agreement vary by purpose, each requiring specific content to meet Legal requirements.

01

Parties to the Partnership

The partnership agreement begins by clearly identifying every partner, individuals or entities, entering the venture. Full legal names, addresses, tax identification numbers, and the date the partnership officially starts are stated upfront so there is no ambiguity about who shares rights, duties, and liabilities from day one.

02

Name and Nature of the Business

A dedicated section names the partnership (whether a trade name or the partners’ surnames) and describes the exact business purpose, such as running a restaurant, offering consulting services, or developing software. Limiting the scope here prevents partners from dragging the firm into unrelated activities without consent.

03

Capital Contributions

Each partner’s initial investment is spelled out in detail: cash amounts, property valuations, equipment, intellectual property, or services rendered, along with agreed-upon dollar values. The clause also covers whether additional contributions are required later, how they are called, and the consequences of failing to meet a capital call.

04

Profit and Loss Allocation

The agreement sets the ratio for dividing profits and absorbing losses, often matching capital contributions, but sometimes adjusted for sweat equity or guaranteed payments. Tax allocations follow the same split unless a special allocation is justified and meets local tax rules, ensuring fairness and IRS or equivalent compliance.

05

Management and Decision-Making

Daily operations and authority are defined: whether all partners manage equally, a managing partner handles routine matters, or a committee votes on strategy. Major decisions, borrowing large sums, selling assets, admitting new partners, require unanimous or supermajority approval to protect minority interests.

06

Salaries and Drawings

Partners may receive reasonable salaries for active work before profit splits, or simply take periodic draws against their share. The clause caps drawings, sets approval processes, and clarifies that salaries are expenses while draws reduce capital accounts, avoiding disputes come tax time.

07

Books, Records, and Accounting

Accurate books must be kept using consistent accounting methods (cash or accrual), open for inspection by any partner at reasonable times. Annual financial statements, tax returns, and audits (if assets exceed a threshold) are prepared by a named accountant, with fiscal year-end specified.

08

Admission and Withdrawal of Partners

New partners join only with existing partners’ consent and a formal amendment. A withdrawing partner gives advance notice, triggers a buy-sell valuation, and receives payout over time or in a lump sum; death or incapacity activates similar succession rules to keep the business stable.

Common Questions on Partnership Agreement

Partnership Agreement vary by purpose, each requiring specific content to meet legal requirements.

What constitutes a partnership agreement under Indian law, and what is its legal foundation?

A partnership agreement is a contractual instrument that establishes the mutual rights, duties, and obligations of persons who agree to carry on a lawful business with a view to profit. It is governed principally by the Indian Partnership Act, 1932, which recognizes both oral and written agreements; however, a written deed executed on non-judicial stamp paper is strongly recommended to preclude ambiguity and furnish irrefutable evidence of terms. The agreement must reflect consensus ad idem on profit-sharing, management, capital contribution, and dissolution, thereby transforming an association into a legally enforceable partnership firm capable of suing and being sued in its registered name.

Is registration of a partnership firm mandatory under Indian law, and what are the consequences of non-registration?

Registration with the Registrar of Firms under Section 58 of the Indian Partnership Act, 1932, is not compulsory at inception but becomes critical for access to judicial remedies. An unregistered firm is barred under Section 69 from instituting a suit against third parties or errant partners for enforcement of contractual or statutory rights arising out of the partnership. Conversely, third parties retain the right to sue the firm or its partners. Registration confers legal identity, enables opening of bank accounts in the firm’s name, and facilitates mutation of immovable property, rendering it a prudent step despite its optional character.

What are the indispensable clauses that every partnership agreement executed in India must contain?

A comprehensive agreement must articulate the firm name, nature and place of business, duration (fixed-term or at-will), capital contribution with interest entitlement, profit and loss sharing ratio, salary or commission to working partners, management and decision-making protocol (unanimous or majority), admission and retirement procedures, valuation of goodwill, accounting and audit obligations, restrictions on partner conduct, dispute resolution through arbitration under the Arbitration and Conciliation Act, 1996, and a dissolution clause specifying grounds, notice period, and asset distribution. Omission of any material term invites application of default provisions under the 1932 Act, which may not align with the partners’ intent.

Can a partnership agreement restrict a partner’s right to compete after retirement, and to what extent?

A restraint of trade clause is permissible only during the continuance of the partnership under Section 11(2) of the Act. Post-retirement non-compete covenants are void under Section 27 of the Indian Contract Act, 1872, unless they protect goodwill sold for consideration. Courts uphold narrowly tailored restrictions ancillary to the sale of goodwill, limited in time, geography, and scope, but strike down blanket prohibitions that impede the retiring partner’s constitutional right to livelihood under Article 19(1)(g).

What procedure must be followed for admission of a new partner into an existing firm?

Admission requires express consent of all existing partners unless the deed provides otherwise. A supplementary deed of partnership must be executed, specifying the new partner’s capital, profit share, and rights, and registered with the Registrar of Firms. Public notice under Section 32(3) is mandatory to bind third parties, and failure to notify renders the firm liable for acts of the new partner as if he were an existing partner. Income-tax reassessment and GST migration formalities must also be completed to reflect the reconstituted firm.

How does Indian law address dissolution of a partnership firm, and what are the modes available?

Dissolution may occur by mutual agreement, expiry of fixed term, completion of venture, notice in a partnership at-will, death or insolvency of a partner, or court order on grounds of misconduct, perpetual losses, or just and equitable cause under Section 44. Upon dissolution, public notice under Section 45 is compulsory to discharge third-party liabilities. Assets are applied first to external debts, then partner loans, and finally capital, with surplus distributed per profit-sharing ratio. A dissolution deed, though not mandatory, is advisable to record settlement and avoid future litigation.

Are electronic signatures and digital execution permissible for partnership agreements in India?

Yes, partnership deeds may be executed electronically using Aadhaar-based eSign or Class 3 digital signatures issued by licensed Certifying Authorities under the Information Technology Act, 2000. The instrument must identify signatories, demonstrate intent, and preserve an audit trail. A clause recognizing electronic execution eliminates ambiguity. However, the physical stamp paper requirement persists in most states; hence, the digitally signed deed must be printed on e-stamp paper of requisite value and submitted for registration to attain complete legal efficacy.

What tax implications arise upon execution and reconstitution of a partnership agreement?

Formation attracts no immediate tax, but contribution of immovable property may trigger capital gains under Section 45 of the Income Tax Act, 1961, if the property’s fair market value exceeds cost. Partnership firms are taxed at 30% on book profits, with interest and remuneration to partners allowable up to limits prescribed under Section 40(b). Reconstitution does not ordinarily attract tax unless assets are revalued upward, causing deemed transfer. GST registration is mandatory if aggregate turnover exceeds the threshold, and the firm’s PAN enables seamless compliance.