Partnership-Nature and Essentials-Indian Act

The law of partnership is contained in Indian Partnership

Act, 1932(hereinafter referred as 'the Act'). Section 4 of the
Act defines Partnership as the relation between persons
who have agreed to share the profits of a business carried
on by all or any of them acting for all. Persons who have
entered into partnership with one another are called
individually "partners" and collectively "a firm" and the
name under which their business is carried on is called the
"firm name". The nature of Partnership is detailed in
Sections 4 to 8 of the Act. The essential conditions for a
partnership is as follows:
1. Agreement
There should be an express or implied agreement between
all the partners.Even if there is no formal partnership
agreement the intention of parties is to be taken into
consideration to determine a partnership.
2. Carrying of Business by everyone
The above stated agreement is to share profits of a
business which is carried on by all. Anyone can carry on
the business for all. This business has to be a lawful one.
3. Profit sharing
Sharing of profit is one of the determinig factors of
partnership. Even if the contract is formal, the intention of
sharing profit determines the partnership. So it must be
the primary object of the partners.The honourable apex
Court of the nation has reiterated the provision in Section
6 of the Act in Girdharbhai v. Saiyed Mohmad Mirasaheb
Kadri(AIR 1987 SC 1782) that in determining whether a
group of persons is a firm or not, the real intention of the
parties has to be taken into consideration. The Supreme
Court had laid down the elements to determine a
partnership as (a) there must be an agreement entered
into by all parties concerned; (b) the agreement so entered
into must be to share profits of a business;(3) the business
must be carried on by all or any one for all.
4. Agency
The definition clearly states that any person can carry on
the business for the benefit of all. It can also be carried on
by all. So mutual understanding and agency is the
lifeblood of partnership. One performs duties on behalf of
another one in a partnership like an agent.
5. Liability
There is unlimited liability upon partners in a partnership.
It is, of course, joint and several. Everyone has certain
liability towards others in a partnership business.
6. No separate Legal Existence 
The partnership is the association of persons. So it does
not have a separate legal existence as in the case of a
company. If there is no partners, there is no partnership. It
is the partners who share the profit and loss of business
and are liable for their acts.
7. Number of persons/partners.
Without any objection and confusion it can be said that
there must be atleast two persons to constitute a
partnership. There can be more than two, but never less
than two. There is limit to the members in relation to
banking and other business