TYPES OF PARTNERSHIP

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TYPES OF PARTNERSHIP:-

          Basically there three types of partnership. General Partnership, Limited Liability Partnership (LLP) and Based on Partnership Registration Status.

·         GENERAL PARTNERSHIP:-

In this type of partnership, each partner has right to take decision about the working and management of the firm. The partner’s liability is unlimited and in case of a financial error / loss incurred by the act of a single partner the personal assets of all the partners can be taken away to pay back the debts and creditors’ claims. General partnership is bifurcated into two categories.

(1) Particular Partnership:-

     The agreement between the partners provides that the partnership is formed for a certain fixed period of time, it is called as a partnership for a fixed period. When such specified period is completed, the partnership automatically comes to an end. However, if the partners continue to carry on the business even after expiry of such period, the partnership becomes partnership at will.

     The agreement between the partners provides that the partnership is formed for a particular venture or undertaking, it is called as a partnership for a particular venture or undertaking. Where such venture or undertaking is completed, the partnership automatically comes for an end.

(2) Partnership at will:-

     A partnership is said to be partnership at will if, it is not a partnership for a fixed period AND it is not a partnership for a particular venture or undertaking. No time or event is satisfied as to when the partnership shall come to an end. A partnership at will may be dissolved by any partner at his will at any time.

·         LIMITED LIABILITY PARTNERSHIP (LLP):-

A limited partnership unlike general partnership is a corporate form of business organization. Here, the liabilities are limited to each partner according to their agreed contribution to the business. The personal property of a partner cannot be attached to pay back the firms debts. This hybrid organization is governed under the Limited Liability Partnership Act, 2008 and not under Partnership Act.

·         BASED ON PARTNERSHIP REGISTRATION STATUS:-

The Partnership Act does not mandate the registration of partnership firm. Both, registered and unregistered firms are valid and recognized under law. The Partnership Firm is to be registered with the Registrar of Firm having jurisdiction over the place of business of the Firm. An unregistered firm is established by execution of an agreement by the partners. The unregistered partnership firm allows the Partners to carry on the business in manner stated and provided in the agreement.

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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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