Legal Validity Without a Deed
The law recognizes a partnership based on mutual agreement, even if it’s oral. A written deed is not compulsory for formation or operation.

• A partnership can exist through verbal agreement or conduct
  
• No legal requirement to register a deed to start operations
  
• The absence of a deed does not affect the firm’s existence
  
• Partners must agree to share profits and run the business jointly
  
• The firm can still be registered under the Act without a deed
  

Default Provisions Under the Act
If there is no deed, the Indian Partnership Act, 1932 provides default rules for governing the relationship among partners.

• Profits and losses are shared equally regardless of capital contribution
  
• No partner is entitled to interest on capital by default
  
• Every partner has equal authority in the business
  
• Disputes are settled as per the default provisions of the Act
  
• There is no provision for remuneration unless agreed informally
  

Risks of Not Having a Deed
Operating without a deed increases the risk of disagreements and legal complications due to undefined roles and terms.

• Difficult to prove terms in court during disputes
  
• Disagreements over profit sharing or duties may arise
  
• Lack of clarity on partner exits, retirement, or death
  
• No predefined terms for capital contribution or withdrawal
  
• Risk of unequal control and misuse of authority
  

Benefits of Having a Deed
A written deed offers structure, legal clarity, and protection to all partners. It helps prevent and resolve conflicts.

• Clearly outlines roles, responsibilities, and profit sharing
  
• Serves as legal evidence in court
  
• Includes rules for adding or removing partners
  
• Helps in smoother financial and tax management
  
• Establishes terms for dissolution and dispute resolution
  

Registration Without a Deed
While not required, a deed simplifies the process of registering the firm with the Registrar of Firms.

• The registrar often asks for a copy of the partnership deed
  
• Registered firms get access to legal remedies in court
  
• A deed helps in opening bank accounts and applying for GST
  
• Necessary for establishing credibility with clients and vendors
  
• Enables partners to define and limit liability formally