Deed of Retirement from Partnership

A Deed of Retirement from Partnership is an Agreement entered into between the Retiring Partner (the Partner who intends to leave the Partnership) and the Continuing Partners (the Partners who will continue to work as Partners of the existing Firm with updated terms).

This Deed can be used for any type of Partnership Firms. Generally, the retirement of the Partner will not dissolve the Partnership (except if there are only two partners) and the Partnership continues to exist with new terms. An Agreement in writing between the Retiring Partner and Continuing Partners will help in the smooth exit of Retiring Partner and avoid any disputes in the Future.

In comparison to the retirement of a Partner, the dissolution of the Firm is when the Partnership dissolves and the books are closed. But, in the case of retirement of a Partner and there exists more than one Partner in the Partnership, the remaining Partners can continue to do the business with updated terms and conditions.

How to use this document?

This Agreement can be either used by the Retiring Partner or by the Continuing Partners. The Deed of Retirement includes the following grounds:

• Partnership name: the legal name under which the partnership was formed.
• Purpose of the partnership: a brief description of the business that the partnership was engaged in.
• Partners information: the legal names and addresses of both the Retiring Partner and Continuing Partners.
• Final settlement amount: the final settlement amount to be paid by either Party to the other Party on the closing of accounts.
• Liability: that the Retiring Partner shall not be liable for the acts and commissions of the Firm from the date of retirement.
• Restrictions: the general and specific restrictions on Retiring Partner in relation to the Firm.
• Public Notice: either party will publish a public notice in a reasonable time after execution of this Agreement.

The Parties can include a Confidential Clause or Non-Disclosure Clause in this agreement as per the requirement. This is used to protect the confidential information of the Firm. If the parties want to fix more complete provisions concerning the confidentiality obligation (for instance: what should and should not be considered confidential information, for how long should they be kept confidential, etc.), they can sign a separate Non-Disclosure Agreement.

The parties can include a Non-Compete Clause, under which the Retiring Partner will be restricted from competing with the Firm for a particular period in a specific region. A Non-Solicit Clause can be added under this Agreement, under which a Retiring Partner will be barred from soliciting or recruiting the customers and employees of the Firm. If the Firm needs an exclusive Non-Compete and Non-Solicit Agreement, a separate Non-Compete Agreement can be used.

The parties can also include the Arbitration Clause in this agreement. Under the Arbitration, any dispute that arises between the parties will be referred to a third neutral person ("Arbitrator") appointed mutually by both the parties. The Arbitrator will hear both the parties and decide the case on its merits. The decision of the Arbitrator will be final and binding on both the parties.

The Retiring Partner will not be absolved from the liabilities of the Firm unless a Public Notice informing the Retirement has been duly published.

To be a valid contract, both the Retiring Partner and Continuing Partners must duly sign this agreement on an appropriate stamp paper as defined under the Stamp Acts and rules of the states concerned.

Applicable Law

The Indian Partnership Act, 1932, defines the rules related to the Partnership and retirement of Partners. The rules under the Indian Contract Act, 1872 may also be applicable.

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