Which term describes a legal contract outlining the partners' share in the business and how profits are distributed?

Which term describes a legal contract outlining the partners' share in the business and how profits are distributed?

• A. Deed of Partnership
• B. Ltd
• C. Plc
• D. Social Enterprise

Answer: (A)

In a partnership, the Deed of Partnership is the legal contract that sets out each partner’s share of the business and how profits (and losses) are distributed. It binds all partners to agreed terms, covering ownership, capital contributions, responsibilities, and decisions about profit sharing, making the arrangement clear and legally enforceable. The other forms aren’t about a partnership agreement among individuals. A Ltd or Plc refers to a limited company, a separate legal entity where profits are distributed as dividends to shareholders, not according to a partner-based profit split. A Social Enterprise describes an organization focused on social outcomes and can be structured in various ways; it doesn’t specify how partners’ shares and profits are allocated in a partnership.

In a partnership, the Deed of Partnership is the legal contract that sets out each partner’s share of the business and how profits (and losses) are distributed. It binds all partners to agreed terms, covering ownership, capital contributions, responsibilities, and decisions about profit sharing, making the arrangement clear and legally enforceable.

The other forms aren’t about a partnership agreement among individuals. A Ltd or Plc refers to a limited company, a separate legal entity where profits are distributed as dividends to shareholders, not according to a partner-based profit split. A Social Enterprise describes an organization focused on social outcomes and can be structured in various ways; it doesn’t specify how partners’ shares and profits are allocated in a partnership.