Conveyancing is an art of drafting deeds and documents whereby any title, right

or interest in an immovable property is transferred from one person to another. It

is based on law and legal principles which have been evolved in the sphere of
conveyancing over years .

A legal document, in general, is a document where two or more parties enter into an
agreement, which is confirmed by their signatures at the end. The term “legal documents”
is broad, especially when it comes to discovery and court-required documents.

Basic Types of Legal Documents

1. Instrument: This is a formal legal document that grants (or proves the grant of) a right.

Examples: Deeds, Wills, Mortgages, etc.

2. Pleading: This is a formal statement made by a party in the content of litigation.

Examples: Complaints

3. Document: This refers to any communication set to a permanent medium that is relevant
to a legal issue. Examples: Police reports, photographs, letters, etc.

DEED
A deed is a signed legal document that transfers ownership of a property or other
asset from one party to another. It is a binding document in a court of law after
it's filed in the public record by a local government official who is tasked with
maintaining documents.

Essentials of a Deed:

(1) The non-operative part (2) The operative part (3) The formal part

The non-operative part contains description or name of deed, date of the deed,
parties to the deed and the recitals.
The operative part contains testatum or premises, habendum, exception and
reservations and covenants.
The formal part contains testimonium, signature and attestation, parcels of
description of the parties
SALE DEED

Sale deed is a legal document describing the transfer of right, title and ownership
of property by a seller to a purchaser at a price fully paid or to be paid in instalments
at a future date. The entire amount of sale transaction also known as sale
consideration is paid at the time of registration of sale deed. Sale can be of
immoveable property and moveable property.
Money consideration is essential in a transaction of sale , the law does not require
that the consideration should be immediately ascertainable in money. The sale gets
complete as soon as the sale deed is registered even if the payment of price is
promised on a future date provided it has been ascertained or made certain able.

Contents of Sale Deed:

A sale deed is usually executed as deed poll by the vendor/ seller and written in
the first person. The law does not require execution by the purchaser also.
Sometimes a deed is executed between a vendor and a purchaser, particularly when
it contains covenants binding on the purchaser.
A sale deed must contain apart from the description of the deed and date, details
of the following elements:

(i) The name of the parties to the deed with their full address

(ii) The capacity and capability of the vendor to transfer the party.

(iii) The vendor title to the property.

(iv) The property and its capability of being transferred and also the details of the property.

(v) The encumbrances and charges if any upon the property and whether the sale
is subject to encumbrances and whether any money was being left with purchaser
to pay off the encumbrances.

(vi) The Price settled, how and when to be paid (earnest money if paid to be set off)

(vii) The other terms agreed upon

(viii) Delivery of possession, actual or constructive

The signing of the deed signifies that the process of sale has been completed. The
seller transfers the right of ownership to the buyer through sale deed. As soon as
the document is signed, the buyer becomes the complete owner of the property.
Usually, the sale deed is executed only when both the sellers and buyers are fully
satisfied and are ready to comply with the terms and conditions as mentioned in
sale agreement. Though not required by law, a sale deed is usually attested by two
witnesses.

Stamp Duty:

The sale deed is drafted on a non-judicial stamp paper of value as set by the State
Government in which the property transaction is taking place. Every state has
predetermined value of stamp paper that are used for drafting immoveable
property. Stamp duty in a sale deed is chargeable under section23 schedule of the
Stamp Act. Also, an outstanding amount can be paid through challan or stamping
for legalizing the sale deed
 Registration of a Sale Deed:

A sale deed is registered in accordance with the Registration Act, 1908. Both the
parties have to be present in person along with two witnesses with all the relevant
documents in the sub registrar’s office to sign the sale deed and close the deal.

The certified copy of the registered deed with the name of the buyer can be
obtained from the registrar’s office. The original documents have to be produced
within four months from the date of registration of the deed. It is the buyer who
pays the stamp duty and the registration charges while seller needs to clear all
other payments related to the property such as property tax, cess, and water and
electricity charges before the deed is signed.

MORTGAGE DEED

A mortgage deed is a legal document that gives lender an interest in a property

when you take out a loan backed by the property. If a borrower does not pay back
a loan in accordance with the agreement, the lender can foreclose and take
possession of the property or have it auctioned. Basically, Mortgage Deed is a
document that allows the lender to put lien on the property until the loan is paid.

Importance of a Mortgage deed

A mortgage deed serves as legal documentation, protecting both borrower and

lender. It specifies the terms and conditions of the loan, ensuring clarity on
repayment schedules, interest rates, and default consequences. The deed
establishes the lender’s right to the property in case of default. It helps borrowers
understand their obligations and manage their finances accordingly. In the event
of legal disputes, a mortgage deed facilitates a fair resolution based on documented
terms.

A mortgage deed becomes necessary whenever a property serves as collateral for

a loan. It is typically required in various scenarios, such as purchasing a property,
refinancing an existing mortgage or obtaining a home equity loan. Having a
legally binding mortgage deed in place is crucial to avoid potential disputes and
misunderstandings between the borrower and the lender

Section 58 of the Transfer of property Act enumerates 6 kinds of mortgages.

The classification of mortgage has been made on the basis of the nature of the
interest which is transferred for securing loan

(1) Simple Mortgage

(2) Mortgage by Conditional Sale
(3) Usufructuary Mortgage
(4) English Mortgage
(5) Mortgage by deposit of title deeds
 (6) Anomalous Mortgage

Contents of Mortgage Deed:

The mortgage deed includes the following details:

1. Names of the parties with their full address.

2. Details of the mortgaged property

3. Details of sum advanced and its repayment terms

4. Habendum clause

5. Insolvency clause

6. Mortgage clause

7. Clause on Possession and Title Deeds

8. Redemption Clause

.
Registration of Mortgage Deed:

Registration of mortgage deed is essential to give legal validity to the document.

1. Execute a mortgage deed.

2. Affidavit to be sworn by 2 witnesses in the deed.

3. The deed should be notarised by the notary public.

4. Pay for the stamp duty as chargeable under Article 40 schedule 1 of Stamp Act
and registration charges at the Registrar of Deed office.

5. Obtain the title for mortgage.

LEASE DEED

When a property is used and enjoyed by the person in possession of it in exchange

for a consideration to the actual owner, the property is said to be leased or rented.
When a property is given on a lease, it means that the lessee or the tenant can use
the property for a definite period of time for which he/she would be required to
pay a certain fixed amount of rent. When this period extends to more than a year,
a lease deed must be prepared.
 Lease dead is a legal document which lays out the prescribed terms and
conditions under which the property is leased out. Lease deed must contain
information about the lessee, lessor, tenure of lease, lease payments payable and
other terms to be followed by the lessee and lessor during the lease term.
A lease deed is generally required when the property is leased for a long period
of time, ranging between 1.5 years or even longer. In such cases, a lease deed
plays an important role to govern the relationship between the landlord and tenant
and lays down the provisions legally binding over them.

The liabilities of the lessor will be implied in every lease unless provided
otherwise and it is not necessary to set them out in the lease deed.

Contents of a Lease Deed:

The key contents to be included in lease deed are as follows:

(1) Name of the parties to the lease deed and their full address

(2) Description of the lease property

(3) Duration for lease period

(4) Rent, Maintenance and Security

(5) Clauses for termination of lease

(6) Subletting of the lease property

(7) Dispute Resolution

(8) Applicable law

Registration of a Lease Deed:

A lease of immoveable property either from year to year or for any term exceeding
1 year or reserving a yearly rent can be made only by a registered instrument . All
other leases of immoveable property may be made by a registered instrument or
by oral agreement accompanied by delivery of possession. The lease deed is to be
executed both by the lessor(landlord) and lessee (Tenant).

Once the lease deed is drafted, it must be registered with the Registrar or Sub
Registrar of the district in which it is located. A lease deed is registered after
paying the requisite stamp duty which differs from state to state.

For registration of a residential lease deed basic documents required are as follows:

1. Lease Deed

2. Stamp Paper
 3. Receipt of registration fees

Execution and Stamp Duty:

Leases can either be oral or written and registered. A lease which is permitted to
be made by oral agreement will be valid only if accompanied by delivery of
possession. If such a lease is reduced to writing it must be registered and delivery
of possession will not validate it. An unregistered written lease is a not valid. A
written registered lease should be attested by at least to witnesses.

GIFT DEED

Gift Deed is a legal document that describes the voluntary transfer of gift from a
donor (owner of the property) to done (receiver of gift) without any exchange of
money. The donor should be solvent and should not use this as a tool for tax
evasion and illegal gains.

As per section 122 of the Transfer of Property Act, 1882 Gift means;

(i) Gift is the transfer of certain existing moveable or immoveable property and
not a future property

(ii) It must be voluntary i.e. it should not be induced by coercion, undue influence,
fraud or misrepresentation.

(iii) It should be without consideration i.e. it can be out of natural love and
affection or for past consideration.

(iv) It must be accepted by the donee.

The following provisions are required for making the Gift Deed:

A person who is competent to make a contract can make a valid gift. A minor or a lunatic
cannot make a gift. The donor must also have a disposing power over the property sought to
be gifted.
that qualifies as gift must have following properties:

(1) It must be well-defined existing moveable and immoveable property.

(2) It must be transferrable

(3) It should exist today and not be a future property

(4) It should be tangible

the gift is made must be an existing person. He must be an

ascertainable person. A gift can be made in favour of minor or a Hindu idol. But
a gift in favour of the public, to dharma or for worship of God is void for
vagueness of done. A gift can be made in favour of a legal person and also can
 be made in favour of Government.

Acceptance of a gift be on behalf of the done is essential for the validity of the gift. The
acceptance must be made during the lifetime of the donor and while he is still capable of
giving. If either the done dies before the acceptance, the gift is void. The best and the safest
course to join the donee as a party to the deed and to state the acceptance of the gift in the
deed itself or a separate endorsement may be made by the donee on the deed accepting and
signed by him.

Minors are not eligible to contract, therefore they cannot transfer property as a
gift. Hence a gift deed in case of donor being minor is legally not valid but gift
may be accepted on behalf of a minor by his guardian and on behalf of an idol by
its manager.

Contents of a Gift Deed:

Being a very important legal document, there are certain things that you are
required to mention in gift deed

1.) Date and place where the deed is to be executed

2.) Information about donar and donee like name, residential address, relationship

3.) Details about the property

4.) Consideration clause

5.) Free will of donar

6.) Rights and liabilities of donee

7.) Delivery of the possession of the property

8.) Revocation clause

Gifting process:
It can be divided into 3 parts as described below:

1.) Drafting of the Gift Deed- A gift deed describes what is transferred and to
whom. Gift deed is a contract between donar and donee which defines
simultaneous and reciprocal act of giving and taking. A gift to be valid must be
made by a person voluntary and not under compulsion without any exchange of
money.

2.) Acceptance: Acceptance of the gift after its execution is a legal requirement
and donee must accept the gift during the lifetime of donor. In case the donee fails
to accept the gift, it is rendered invalid. The acceptance may be validated by acts
such as taking possession of the property.
 3.) Registration: As per section 123 of Transfer of Property Act, a gift of
immoveable property cannot pass any title to the donee unless it is registered.
Attestation by two witnesses is required during registration and post
registration, title transfer is possible.

Registration of Gift Deed

Registration of gift deed is done as per the provisions of the Registration Act,

1908 Common steps for the registration process are:

1. Gift deed should be signed by both the donar and donee and attested by 2witnesses.

2. Valuation of property being gifted by an approved valuation expert.

3. Payment of stamp duty and transfer duty- stamp duty varies for women and men
(slightly lower for women). Stamp duty also varies from state to state and is
chargeable under article 33 of schedule I of the stamp act. The duty payable is
same as payable on conveyance which is for consideration equal to the value of
the gifted property.

4. The Gift deed should get registered at registrar or Sub Registrar office.
Revocation of Gift Deed

A gift once made and registered with due process of law cannot be revoked. After
the acceptance, it becomes the property of the donee. The donor cannot
independently revoke the deed. Also, in a deed where the parties have agreed that
the deed shall be revocable in part or whole, by the merewill of the donor, is not a
valid Gift Deed.

POWER OF ATTORNEY

A Power of Attorney (POA) or letter of attorney is a written authorization to

represent or act on another‟s behalf in private affairs, business, or some other
legal matter.

A power of attorney is a document whereby one or more persons giveauthority to

one or more persons to act in his or their place. It is delegation of authority in
writing by which one person empowers another to act on his behalf. The giver of
the authority is called the „donor‟ and the
recipient is called “done”. If the appointment is made for specified act or acts the
deed is called “special power of attorney” and if it is made generally for certain
acts then it is called “general power of attorney”.

It is important to understand the difference between a General and a Special power of

attorney.

General Power of Attorney: It gives a broad authorization to the agent. The agent
may be able to make medical decisions, legal choices or financial or business
decisions.

Special Power of Attorney: It narrows what choices the agent can make. In other
words, special power of attorney allows you to be more specific. Several different
POAs can be made with different agents for each.

Contents of Power of Attorney

The Power of attorney Law provides that any “natural person having the
capacity to contract may execute a power of attorney”.

Following are the provisions to be contained in a legal document of power of attorney

1. It must contain name, age and address of Principal and agent (attorney)

2. It must contain the date and place of execution of Power of Attorney

3. Details of the powers that the principal wishes to delegate and be administered
by the attorney- in-fact.

4. The power of attorney must be signed by the principal or by another adult

in the principal‟s presence and under his direction

5. The power of attorney is signed and acknowledged before a notary public

or is signed by two witnesses.

A power of attorney has to be in writing and signed by donor. It is executed in

the form of a deed poll, a unilateral document, usually in the first person.

Moreover no law requires a power of attorney to be attested but it is useful to

have it attested by witnesses. Though no law requires a power of attorney to be
authenticated it is desirable to have this done so as to avail of the presumption
under section 85 of the Evidence Act.

Registration and stamp duty of Power of Attorney

Any person who is above 18 years of age and of sound mind can appoint an
attorney. A minor cannot be appointed as an attorney holder. To make power of
attorney legally valid, it needs to be signed by both the principal and attorney
along with 2 witnesses. The deed shall then be executed on a stamp paper of
appropriate value depending upon the state in which it is made. Stamp duty on
power of attorney is payable under article 48 of the Stamp Act. It is not necessary
to register the power of attorney deed unless it involves transfer of property
rights/titles.

Both the parties to the power of attorney deed must fully understand what their
rights and obligations are under the deed and should act accordingly.The principal
shall ratify i.e. consent to the acts of the attorney which he has done in his course
of duty as an attorney.

WILL

A Will or Testament is a legal document that expresses a person‟s

(testator)wishes as to how their property is to be distributed after their death and
as to which person (executor) is to manage the property until its final distribution.
Thus, the word “will” validly apply to both personal and real property.

"Will" defined in Sec. 2 (h) of the Succession Act mean the legal declaration of
the intention of the testator with respect to his property which he desires to be
carried into effect after his death. The fundamental idea of a will is that the testator
should thereby dispose of his property or such part of it as his personal law
permits him to bequeath by will, in such a manner as seems to him best.

The two essential characteristics of a will are that:

(1) It must be intended to come into effect after the death of the testator, and

(2) It must be revocable by the testator at any time.

b
e distributed, allocated and spent after his death. A person who dies without
creating a will is called dying intestate.

Dying intestate forces, the relatives of the deceased to spend additional time and
money for acquiring the estate of the deceased, which could have been easily done
by creating a will. Dying intestate does not distribute the assets of the deceased
according to his wish and will rather it done according to the law. As it is only
logical to distribute your hard-earned money according to your wish and the way
you want it and this can be easily done by creating a will.

Every person of sound mind not being a minor may dispose of his property by
will. Even a married woman may dispose by will any property which she could
alienate by her own act during her life.
Person who are deaf or dumb or blind are not there by incapacitated for making a
will if they are able to know what they are doing. A person who is ordinarily insane
may make a will during an interval in which he is of sound mind. No person can
make a will while he is in such state of mind, whether arising from intoxication or
from illness or from any other cause that he does not know what he is doing.

All property, moveable or immoveable of which testator is owner and which can
be transferable can be disposed by a will. Property which is legally non-
transferable cannot be bequeathed. If a person has only a life interest in a
property, he cannot make a will in respect of it.
(1) Privileged and Unprivileged Will
(2) Contingent / Conditional will
(3) Joint Wills
(4) Mutual Wills
(5) Duplicate Wills
(6) Holograph Wills
(7) Concurrent Wills
(8) Sham Wills

within executing a
valid will as per section 63 of Indian Succession Act.

(1) The testator should sign or affix his mark (e.g. Thumb or signature)

(2) The will must be attested by 2 or more witnesses

(3) The witnesses must have seen the testator sign or affix his mark to the will
(4) Each witness shall sign the will in the presence of the testator

(5) The witness should not be beneficiary under the will

No particular form of will is prescribed by law. It is not necessary that any

technical words or terms of arts be used in a will, but only that the wording be
such that the intention of the testator can be known therefrom.

A will or bequest not expressive of any definite intention is void for uncertainty.

Contents of Will:

Any person over the age of majority and having „testamentary capacity‟ can
make a will with or without the aid of lawyer. Preparation of will does not require
any specific legal language. Any form of writing or writing or printing may be
employed. However, the language should be simple as possible and free from
technical words and easily intelligible to layman.

(1) Mention the name and address of the Testator

(2) The Testator must clearly identify themselves as the maker of the will. The will
should be typically satisfied by the words “last will and testament” on the face of
the document.

(3) The testator should clearly declare that he or she revokes all previous wills and codicils

(4) The testator may demonstrate that he or she has the capacity to dispose of
their property and does so freely and willingly.
(5) Details of procedure of making bequests

(6) Appointment of executor

(7) The testator must sign and date the will, usually in the presence of at least two
disinterested witnesses (persons who are not beneficiaries). The testator‟s
signature must be placed at the end of the will.

Signature and Attestation:

The testimonial Clause (signature) and the attestation clause (witnesses) are the
most important parts of a will. If these are not made strictly in accordance with the
requirements of law it will not be a valid will. The testator and all the attesting
witnesses must sign on every page of the will in presence of the testator.

The attesting witnesses need not know the contents of the will. Each of them must
have seen the testator sign or affix his mark to the will or has seen some other
person sign the will, in the presence and by the direction of the testator. An
executor is charged with theduty and conferred with the power to carry out the
directions contained in the will. He has to collect and realise the estate of the
deceased pay his debts and distribute the legacies.

Registration and Stamp Duty on Will:

No stamp duty is chargeable on will and registration of Will is not mandatory. It

is optional (Section 18(c), Registration Act, 1908). However a registered will has
certain advantages. Any testator may either personally or by duly authorized agent
deposit with any registrar his will in a sealed cover super scribed with name of
testator and that of his agent if any and with thestatement of the nature of the
document as per section 42 of Registration Act, 1908. The testator or after his
death any person claiming as executor or otherwise under a will, may present it to
any Registrar or Sub Registrar for registration under section 40 of the Registration
Act, 1908.

Revocation of Will:

Section 62 of the Indian Succession Act provides that a will is liable to be revoked
or altered by the maker of it at any time when he is competent to dispose of his
property by will. Section 69 enacts that every will shall be revoked by the
marriage of the testator. A will may also be revoked by the execution of a new
will.
EXCHANGE DEED

A deed of exchange is a legal document that facilitates the mutual transfer of

real property between two parties. The Transfer of Property Act of 1882
governs such exchanges in India.
An exchange deed is used when you want to exchange something you own, like a
house or land, for something owned by another person instead of using money.
This can be done for immovable property (land and buildings) or movable property
(vehicles, furniture, etc.).

• The primary feature of an exchange deed is the mutual transfer of

ownership rights between the parties involved. The property involved
could be residential, commercial, or even land.
• The transaction can involve movable or immovable properties and
cash if a value difference exists between the exchanged properties.
• Once executed and registered, an exchange deed is legally binding and
provides the same legal protection as a sale deed.

Following are the contents of a exchange deed

1) The exchange deed should clearly state the date both parties agree upon
the property exchange.
2) It must include detailed specifications of the properties involved, such
as their location, size, and any other relevant characteristics. It gives
clarity on what is being exchanged.
3) The names and addresses of the parties involved in the exchange should
be mentioned. It includes the grantor (the person/property owner giving
away the property) and the grantee (the person receiving the property).

4) A clear statement that the transaction is an exchange of properties should

be included. It distinguishes the transaction from a sale.
5) Both parties involved in the deed of exchange must sign the
document, and witness signatures are also required to validate the
agreement.
6) Details of the applicable stamp duty and registration fees must be
 included. Both parties are aware of the financial obligations involved in
the property exchange.
If the value of the exchanged properties differs, the exchange of property deed
should state how this difference will be compensated through a monetary
payment. The stamp duty payable on the deed of exchange depends on the state
and the parties involved. The responsibility for paying the stamp duty in a
property exchange can be negotiated between the parties involved. Unlike a sale
deed, where the buyer pays the stamp duty, a deed of exchange requires mutual
agreement on who will bear the cost. It is common for the parties to negotiate the
responsibility of stamp duty while you draft the exchange deeds

Registration of Exchange deed

Exchange deed registration is a mandatory process under Indian law that gives legal
validity to property exchanges. The registration must be carried out at the Sub-
Registrar’s office within the jurisdiction where the property is located. .In some
cases, additional schedules might be attached to the deed to provide more detailed
information about the properties, such as encumbrances, easements, or specific
inclusions/exclusions.
The registration process for an exchange deed is detailed but straightforward.
Here are the essential steps to ensure smooth exchange deed registration:

1. Drafting the Deed

2. Valuation and Stamp Duty Calculation.

3. Payment of Stamp Duty

4. Signing the Deed

5. Submitting for Registration

The Sub-Registrar will verify the document, cross-check the details, and
ensure the stamp duty has been paid correctly. Once verified, the document is
recorded in the official registry, and a certified copy is provided to the parties.
 PROMMISSORY NOTE
A promissory note is a legal, financial tool declared by a party, promising another
party to pay the debt on a particular day. It is a written agreement signed by drawer
with a promise to pay the money on a specific date or whenever demanded.

This note is a short-term credit tool which is not related to any currency note or
banknote.

All promissory notes constitute three primary parties. These include the drawee,
drawer and payee. Most of the times, the payee and drawee are the same people to
whom the cash is paid. The party who has loaned the money keeps the promissory
note, and when the due is cleared, the payee or drawee cancels the note and gives it
to the drawer/payee.

Essential features of Promissory Note

A promissory should be in writing, and an oral promise to pay money is not accepted.

It is a promise to pay the money on a particular time or when demanded.

The mentioned amount can neither be added or subtracted.

The document is duly signed and drawn by the drawer and stamped.

The promise to pay a certain amount of money must be absolute in all

cases. In such notes, a conditional guarantee is not accepted.

The note should contain all the required information including the name
of the drawer and payee, date of maturity, terms of repayment, issue date,
name of the drawee, name, and signature of the drawer, principal amount,
and the rate of interest, etc .

Bill of Exchange
A bill of exchange is a written order from one person (the drawer) to another person
(the drawee) to pay a specified sum of money to a third person (the payee) at a
specified date or on demand.

Bill of exchange in India is defined by the Negotiable Instruments Act of 1881.

Under this act, bill of exchange is defined as “an instrument in writing containing
an unconditional order, signed by the maker, directing a certain person to pay a
certain sum of money only to, or to the order of, a certain person or to the bearer
of the instrument.”
A bill of exchange is drawn between two or three parties.

• Drawee: the party required to pay the money

• Drawer: the maker of the bill of exchange
• Payee: the party that receives the money

The different types of bills of exchange are demand bills, sight bills, time bills,
usance bills and acceptance bills.

Bill of exchange should have the following contents

1. Name and address of drawer

2. Name and address of drawee
3. Amount of money to be paid
4. Date of transaction
5. Date of maturity
6. Signatures of both parties to authorize the transaction

Features of a Bill of Exchange

• Bill of exchange must be in writing and is legally binding

• It is transferable and can be endorsed to another party. It also serves as a
guarantee of payment and is usually accompanied by a promissory note.
• If it is not paid on the due date, the holder can take legal action to
enforce the payment.
• The bill must be signed by both drawee and drawer.

Bills of exchange are transferable between parties. This process is called

endorsement and helps reduce risk to both parties in case of failure of payment.

The legal implications of bills of exchange depend on the jurisdiction in which the
bill is issued and the laws governing it. Generally, a bill of exchange crees a legally
binding obligation between the parties involved, and the drawee is obligated to
make the payment to the payee as specified in the bill.
 Promissory Note VS Bill of Exchange

Feature Promissory Note Bill of Exchange

An unconditional order in writing,

A written promise by one party issued by a seller (drawer) to a buyer
(maker) to pay a specified amount to (drawee) to pay a specified amount to
another party (payee) on a specific a payee (seller) on a future date or on
Definition date or on demand. demand.

Parties Maker (borrower) and Payee (lender) Drawer (seller), Drawee (buyer), and
Involved Payee (seller)

Payment may or may not be assured

Payment Based on trust and relationship depending on acceptance and financial
Assurance between parties. standing.

Payment Specified maturity date or on-

Date demand. Specified due date or on-demand.

Often used in informal lending Widely used in domestic and international

Usage situations. trade for payment.

Can be negotiable or non- negotiable, Can be negotiable or non- negotiable,

Negotiability depending on terms. depending on terms.

PARTNERSHIP DEED

A partnership deed is an agreement between the partners of a

firm that outlines the terms and conditions of partnership
partners among the

The partnership deed helps to resolve any disagreement or conflict which arises
between the partners regarding the partnership norms. The purpose of a partnership
deed is to give a clear understanding of the roles of all partners, ensuring the smooth
running of the operations of the partnership firm. A partnership deed defines the
position of the partners of the firm.

Types of Partnership Deeds

 The partnership deed contains the following details:

Name of the firm

The partners of the firm should decide the firm’s name which adheres to the
provisions of the Partnership Act. The firm name is the name under which the
business is conducted.

Details of the partners

The deed should include details of all the partners, such as their names, addresses,

General Partnership Deed: The general partnership deed contains the

terms and conditions of a general partnership, where each partner shares
equal responsibility for the management of the firm business and are
jointly liable for debts or obligations.

Limited Partnership Deed: The limited partnership deed establishes a

limited partnership, which includes general and limited partners. The
general partners have unlimited liability for the debts of the partnership
firm, while the limited partners have limited liability and do not
participate actively in the management of the business.

Contents of a Partnership Deed

contact number, designation, and other particulars.

Business of the firm

The deed should mention the business that the firm undertakes. It may be dealing
with producing goods or rendering services.

Duration of firm
The deed should mention the duration of the partnership firm, i.e. if the firm is
constituted for a limited period, for a specific project or for an unlimited period.
Place of business
The deed should contain the principal place of business where it carries on the
partnership business. It should also mention the names of any other places where
it conducts business.
Capital contribution
Each partner will contribute an amount of capital to the firm. The entire capital of
the firm and the share contributed by each partner are to be mentioned in the deed.

Sharing of profit/loss
The ratio of sharing profits and losses of the firm amongst partners should be
noted in the deed. It can be shared equally amongst all partners, or according to
the capital contribution ratio or any other agreed ratio.

Salary and commission

The details of the salary and commission payable to partners should be mentioned
in the deed. The salary and commission can be paid to the partners based on their
role, capabilities or any other capacity.

Partner’s drawings
The drawings from the firm allowed to each partner and interest to be paid to the
firm on such drawings, if any should be mentioned in the deed.

Partner’s loan
The deed should mention whether the business can borrow loans, the interest rate
of loans, properties to be pledged, etc. It can also mention if a partner of the firm
can borrow loans from the business or not.

Duties and obligations of partners

The rights, duties and obligations of all the partners of the firm should be
mentioned in the deed to avoid future disputes.

Admission, death and retirement of partners

The deed should mention the date of admission of the partner, the regulations
governing the admission of a new partner, resignation, or changes after the death
of a partner of the firm.

Accounts and audit

The deed should contain details about the audit procedure of the firm. It
should mention the details of how the partnership accounts are to be prepared and
maintained.
How to Draft a Partnership Deed?

The partnership deed can be oral or written. However, it is better when the
partnership deed is written since it helps to avoid any future conflict and is also useful for tax
purposes and registration of the partnership firm. The partnership deed can be drafted by all
the partners after coming to a mutual agreement regarding the clauses of the deed.

Below are the points to be kept in mind while drafting the partnership deed:

The deed should contain the clauses as mentioned above. It must be

executed by at least two or more partners.
It should be drafted by mutual agreement between the partners. Ambiguous clauses and
sentences must be avoided. The clauses must clearly state the details/description.
It should be printed on an e-stamp paper of a value of Rs.200 or more.
It should be signed by all the partners on all pages of the deed.

Partnership Deed Registration

The partnership deed is registered under the Indian Registration Act, 1908. It must

be printed on non-judicial stamp paper with a value of Rs.200 or more based on

the capital of the partnership firm. It has to be signed by all the partners and each

partner should have a copy of the partnership deed.After the deed is signed by the partners, it
must be registered with the Sub-Registrar/ Registrar Office of the
jurisdiction where the partnership firm is located. The stamp duty for registering

the partnership deed varies from state to state. The respective states’ Stamp Act

prescribes the stamp duty to be paid to the Sub-Registrar at the time of registration. The
notarization of the partnership deed is required along with its
registration. The registration of the partnership deed makes it legally valid.
Memorandum of Association (MOA)

A Memorandum of Association (MOA) is a legal document that outlines the objectives,

powers, and scope of a company’s activities. It is one of the most important documents for
a company, as it sets the foundation for its formation and operation.

The Memorandum of Association must be signed by all initial shareholders or guarantors

agreeing to form the company. According to Section 399 of the Companies Act, 2013, the
Memorandum of Association is a public document, meaning that anyone entering into a
contract with the company is expected to have knowledge of the contents of the
Memorandum of Association.

Key Points of a Memorandum of Association:

Company Name: The Memorandum of Association contains the

Name of the company, which must comply with naming guidelines. Registered Office: The
location of the company’s registered office.

Objectives: Defines the main objectives or business activities the company will undertake
(e.g., manufacturing, providing services, etc.).
Liability of Members: Specifies whether the liability of the company’s members is limited
or unlimited.

Capital Structure: The amount of capital the company is authorized o raise, including the
number and value of shares.

Association Clause: Confirms that the subscribers (initial Shareholders) agree to form the
company and will subscribe to its shares

Articles of Association (AoA)

The Articles of Association (AoA) is a document that specifies the rules and regulations for
the internal management of a company. It outlines how the company’s business will be
conducted, and it governs the

Relationship between the company, its shareholders, and its directors The Articles of
Association is often referred to as the “constitution of the company,” and it provides a
framework for the day-to-day operations of the company.

Key Components of Articles of Association: Company Name and Type: The full name of
the company and its legal structure (eg. Limited, public, private).

Purpose of the Company: The objectives and activities the company aims to pursue.

Capital Structure: The types and number of shares issued, share classes, and how capital is
raised.

Corporate Governance: The rules for the appointment, power and responsibilities of
directors, as well as shareholder rights and meetings.
Management of the Company: Specifies the powers and responsibilities of the directors and
shareholders, including voting rights and decision-making processes.

Dividend Policy: Outlines how profits will be distributed among shareholders.

Meetings: Details regarding shareholder and director meeting including how and when they
are to be held, quorum requirements, and voting procedures.