PARTNERSHIP AND ITS FEATURES

When two or more than two persons come together to form a business and divide profit and liability among themselves in the predetermined ratio, is called a partnership. In India, all the aspects, functions of the partnership are administered in the Partnership Act,1932.

FEATURES OF PARTNERSHIP

1. Agreement between Partners: it is an association of two or more individuals, comes into an agreement or a contract. The agreement becomes the basics of the association between the partners. An agreement is in the written form. An oral agreement is legitimate.
2. Two or More Persons: to form a partnership, there should be at least two persons possessing a common goal. The Partnership Act[i] does not specify the maximum limit on the number of partners. Though, Companies Act[ii] lays down the partnership or association of more than 10 people in the case of banking and 20 in other types of business. It is considered illegal unless registered as a joint-stock company.
3. Registration: under this Act, registration of a firm is not compulsory. But if the firm is not registered then certain perks of registration cannot be used by that firm. Perks of registration are: (a) the firm cannot file suit neither can be sued, (b) dispute between partners cannot be redressed in the court of law.
4. Profit-Sharing: the partnership agreement must specify the manner of sharing profits and losses at the time of forming the partnership. It can be divided into 1:1 or it can be divided as per the amount of investment, it depends upon the partners.
5. Agency Relationship: every partner is an agent of the firm as well as other partners. Partners have an agency relationship among themselves. The business can be carried out jointly run by one nominated partner on behalf of all. Any acts done by a nominated partner in good faith. And on behalf of the firm are binding on other partners as well as the firm.
6. Unlimited Liability: all partners are jointly and severally responsible for all activities carried out by the firm. The assets of the firm are not sufficient to meet the obligations of creditors of the firm. The private assets of the partners can also be attached.
7. Not a Separate Legal Entity: the firm does not have separate individuality from the partners. The firm gets terminated in case of bankruptcy, death, or lunacy of any one of the partners.
8. Mutual Trust and Confidence: a partnership is built on the grounds of mutual trust, confidence, and understanding among partners. Each partner supposed to act for the benefit of all.

This article does not intend to hurt the sentiments of any individual, community, sect, or religion, etcetera. This article is based purely on the author’s opinion and views in the exercise of fundamental rights guaranteed under Article 19 (1)(A) and other related laws being enforced in India for the time being.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts that have been made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.