PARTNERSHIP

Partnership
■ It is the relation between persons who have agreed to share the
profit of a business carried on by all or any one of them acting for
all.
■ It is voluntary association of two or more persons who contribute
money , property, time and skill to carry on business for profit and
share losses of the business.
Characteristics of Partnership
■ Legal Entity
A partnership has no legal entity apart from its members.
■ Agreement
A partnership is formed as a result of an agreement between
two or more persons.
Characteristics of Partnership
■ Number of Partners
At least 2 persons are required to form a partnership.
■ Purpose of Partnership
The partners must agree to run a certain business. Where
there is no business, there is no partnership.
■ Share Profits
The agreement between partners must be to share the profits
of the business.
Characteristics of Partnership
■ Mutual Agency
The business may be carried out by all the partners or any of
them acting for all the partners. Each partner acts as an agent
of the other partners of the firm.
■ Unlimited Liability
All Partners are individually and collectively responsible for the
debts of the business. If there’s any loss and firm’s assets are
insufficient to pay the claims of creditors, private assets of
partners can be sold to pay the claims.
Characteristics of Partnership
■ Transfer of Ownership
Usually, partnership deed includes provisions regarding the
transfer of ownership of partners. If there’s no provision, a
partner cannot transfer ownership.
■ Duration
A partnership continues as long as the partners are willing to
run the business. It comes to end on death , insanity or
insolvency of any partner.