Difference between registered and unregistered partnership firm – In India, Partnership is provisioned by Indian Partnership Act, 1932 and the Registration of Partnership Firm is not essential as per this Act but you will miss some benefits.
A partner works in a partnership firm as an oblique agent for other partners and every partner will be responsible for the acts done by other partners on behalf of the firm.
If there is excellent understanding and mutual faith between partners, then registration may not be required. Though, future is uncertain and it is always suitable to register a partnership firm to get benefits of registering a Partnership firm.
An unregistered partnership firm cannot file legal suit against any third party to impose a right arising out of a contact.
A partner of an unregistered partnership firm cannot file a suit against the firm and co-partners or to any third party to enforce the rights under partnership deed.
Though, There are Some privileges Which Cannot be Deprived of Even if a Partnership Firm is Not Registered with the Registrar of Firms:
A third party can sue even an unregistered partnership firm or any partner of such firm.
Every partner has right to sue for closure of the firm, accounts after closure and awareness of property after closure.
Essential Clauses in Partnership Deed
Following clauses are really essential in every partnership deed, every deed is not the same. Therefore, you need a modified partnership deed to care for your business interests.
Profit-sharing clause: This indicates how the partners in the firm will break up profits and losses, whether equally or unequally.
Capital contribution clause: It should be mention in the Partnership Deed.
Dispute resolution clause: It may state that any legal disputes will be settled through mediation or arbitration.
Retirement/Termination clause: In case of termination, the clause should indicate what and how a partner will be terminated, if a person wants to get out of the partnership, what is required to be done, if the capital will be returned, and so on.