general nature of partnership

Question 1

definition of partnership

Answer 1

section 4
‘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.

Question 2

definition of partner, firm , firm name

Answer 2

section 4
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’.

Question 2

elements of partnership

Answer 2

1. Partnership is an association of two or more persons.
2. the partnership must be a result of an agreement entered into by all the persons concerned
3. partnership is organized to carry on some business
4. the agreement must be **to share the profits ** of the business
5. the business must be carried on by all or any of them acting for all

Question 3

association of two or more persons

Answer 3

1. partnership is an association of 2 or more persons
2. only persons recognized by law can enter into an agreement of partnership
3. a firm cannot be a partner
4. a minor cannot be a partner in a firm
   with consent of all partners, may be admitted to the benefits of the partnership
5. partnership is silent of max no. of partners
6. section 464 of CA,2013, puts a limit of 50 partners in nay association/partnership firm

Question 4

agreement

Answer 4

1. partnership must be the result of an agreement between two or more persons
2. agreement must be** entered into by **all the persons concerned
3. this element relates to** voluntary contractual nature** of partnership
4. an agreement may be express, it may also be implied from the act done by partners and from a consistent course of conduct being followed, showing mutual understanding between them
5. it may be oral or in writing

Question 5

business

Answer 5

1. there must exist a business
   For the purpose, the term ‘business’ includes every trade, occupation and profession
2. the motive of the business
   is the “acquisition of gains” which leads to the formation of partnership
3. there can be no partnership when there is no intention to carry on the business and to share the profit thereof

Question 6

agrement to share profits

Answer 6

1. The sharing of profits is an essential feature of partnership
2. There can be no partnership where only one of the **partners **is entitled to the whole of the profits of the business
3. Partners must agree to share the profits in any manner they choose
4. agreement to share losses is not an essential element
5. It is open to one or more partners to agree to share all the losses
6. in event of losses, unless agreed otherwise, must be borne in PSR

Question 6

kinds of partnership

Answer 6

with regard to duration - partnership at will
-partnership for a fixed period

with regard to the extent of business
- particular partnership
- general partnership

Question 6

partnership at will

Answer 6

section 7
1. no fixed period has been agreed upon for the duration of the partnership
2. there is no provision made as to determination of the partnership

a partnership entered into for a fixed term is continued after the expiry of such term, it is to be treated as having become a partnership at will.

A partnership at will may be dissolved by any partner by giving notice in writing to all the other partners of his intention to dissolve the same.

Question 6

Partnership for a fixed period

Answer 6

Where a provision is made by a contract for the duration of the partnership, the partnership is called ‘partnership for a fixed period’.
It is a partnership created for a particular period of time .
Such a partnership comes to an end on the expiry of the fixed period .

Question 6

Particular partnership

Answer 6

A partnership may be organized for the prosecution of a single adventure as well as for the conduct of a continuous business.

** Where a person becomes a partner with another person in any particular adventure or undertaking the partnership is called ‘particular partnership’**

A partnership, constituted for a single adventure or undertaking is, subject to any agreement, dissolved by the completion of the adventure or undertaking.

Question 6

General partnership

Answer 6

Where a partnership is constituted with respect to the business in general, it is called a general partnership.
A general partnership is different from a particular partnership.
In the case of a particular partnership, the liability of the partners extends only to that particular adventure or undertaking,
but it is not so in the case of general partnership.
General partnership is different from limited liability partnership.