PARTNERSHIP OVERVIEW

INTRODUCTION:-

·         Partnership is 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 collectively called as “Firm”.

·         Person who have entered into partnership with one another are individually called as “Partners”.

·         The name under which the business of partnership is carried on is called as “Firm Name”.

ESSENTIAL FEATURES:-

·         The number of partners shall be required as minimum 2 and maximum 10 in case of banking business and 20 in case of any other business.

·         There must be an agreement between the partners.

·         The agreement between the partners is in writing, it is called as a partnership deed.

·         The agreement must be lawful.

·         There must be some business i.e., the agreement must be to carry on some business.

·         There must be sharing of profits. Every partner must have some share in the profits of the partnership firm.

·         The partnership deed may provide that some particular partner shall not share the losses. Thus, it is possible to have a ‘partner in profits only’.

·         There must be mutual agency between partners. Mutual agency means that every partner is an agent of the other partners. In other words, acts done by one partner will bind the other partners.

 

LEGAL STATUS OF A FIRM:-

·         A firm is not a separate legal entity. It is not a legal person; it is merely a collection of partners.

·         The firm does not acquire an identity different from its partners.

·         Therefore, a firm cannot hold property in its own name, it cannot sue or be sued in its own name.

·         The partners are also personally liable for all the business obligations of the firm.

 

REGISTRATION OF FIRM:-

·         The registration of a firm is not compulsory.

·         Registration of firm is advantageous to the firm since a registered firm can maintain an action arising from a breach of contract in a Court of law.

·         If a firm is not registered, it cannot maintain such an action, and so non-registration results in various disabilities for the firm.

·         Mere non-registration of a firm does not make the firm or a business of the firm illegal.

·         No penalty is imposed if a firm is not registered.

 

TYPES OF PARTNERSHIP:-

·         General Partnership.

·         Limited Liability Partnership (LLP).

Based on Partnership Registration Status.

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