What is the definition of partnership in India?
- In India, we have a definite law that covers all aspects and functioning of a partnership, The Indian Partnership Act 1932. The act also defines a partnership as “the relation between two or more persons who have agreed to share the profits from a business carried on by either all of them or any of them on behalf of/acting for all”
However, with the growth of the economy and increase in the complexity of business operation, the forms of corporate organizations keep on changing. There is a need for the law to take into account the requirements of different kinds of companies that may exist and seek to provide common principles to which all kinds of companies may refer ...
Limited Liability Partnership In Limited Liability Partnership (LLP), all the partners have limited liability. Each partner is guarded against other partners legal and financial mistakes.
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framework in which a business operates, a detailed study of the organisation and management of business processes and its interaction with the environment is required. Globalisation has changed the way organizations transact their business. Information Technology is becoming a part of business operations in more and more organisations.
- Partnership Definition
- Features of A Partnership
- Types of Partners
- Solved Question For You
A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations.
In India, we have a definite law that covers all aspects and functioning of a partnership, The Indian Partnership Act 1932. The act also defines a partnership as “the relation between two or more persons who have agreed to share the profits from a businesscarried on by either all of them or any of them on behalf of/acting for all” So in such a case two or more (maximum numbers will differ according to the business being carried) persons come together as a unitto achieve some common objective. And the profits earned in pursuit of this objective will be shared amongst themselves. The entity is collectively called a “Partnership Firm” and all the individual members are the “Partners”. So let us look at some important features.
1] Formation/Partnership Agreement
A partnership firm is not a separate legal entity. But according to the act, a firm must be formed via a legal agreementbetween all the partners. So a contract must be entered into to form a partnership firm. Its business activity must be lawful, and the motive should be one of profit. So two people forming an alliance to carry out charity and/or social work will not constitute this form of organisation. Similarly, a partnership contract to carry out illegal work, such as smuggling, is void a...
Browse more Topics under Forms Of Business Organisations
1. Introduction and Evaluation to Forms of Business Organisations 2. Sole Proprietorship 3. Joint Hindu Family Business 4. Cooperative Society 5. Partnership Deed and Registration 6. Types of Companies 7. Joint Stock Company 8. Forms of Organising Public Sector
2] Unlimited Liability
In a unique feature, all partners have unlimited liability in the business. The partners are all individually and jointly liable for the firm and the payment of all debts. This means that even personal assets of a partner can be liquidated to meet the debts of the firm. If the money is recovered from a single partner, he can, in turn, sue the other partners for their share of the debt as per the contract of the partnership.
Not all partners of a firm have the same responsibilities and functions. There can be various types of partners in a partnership. Let us study the types of partners and their rights and duties. 1. Active Partner: As the name suggests he takes active participation in the business of the firm. He contributes to the capital, has a share in the profit and also participates in the daily activities of the firm. His liability in the firm will be unlimited. And he often will act as an agent for the other partners. 2. Dormant Partner: Also known as a sleeping partner, he will not participate in the daily functioning of the business. But he will still have to make his share of contribution to the capital. In return, he will have a share in the profits. His liability will also be unlimited. 3. Secret Partner: Here the partner’s association with the firm is not public knowledge. He will not represent the firm to outside agents or parties. Other than this his participation with respect to capita...
Q: What are the advantages of a partnership? Ans: Partnerships have many advantages as a form of business, such as 1. Formation of partnerships firm is an easy task. You only require a contractof partnership. Registration is not compulsory in most cases. 2. Since many partners are involved in a business they all bring their own expertise and management styles. This helps in better management of the business. 3. All partners also contribute to the capital of the firm so it has more fundsto work with 4. The risk of the businessis also shared among all partners.
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