2. Partnership refers to an agreement between
persons to share their profits and losses arising
on account of actions carried on by all or any one
of them acting on behalf of all.
Partners, firm, firm name:
Partners:
Persons entered into partnership individually
Firm:
Collectively a firm or organization
Firm name:
The name under which the business is carried
3. Received the assent of the Governor-General on 8th
April, 1932
Came into force on 1st October, 1932
Administered through the Ministry of Corporate
Affairs
Before the enactment of this act, partnerships were
governed under the provisions of the Indian Contract
Act
4. Association of two or more than two persons.
Agreement to share profits of the business.
Business must be carried on by all or any of them
acting for all.
Unlimited liability.
Restriction on transfer of interest.
Unanimity of consent.
Agreement must be to carry on some business.
5. Agreement: Orally, written, or may be implied.
Consent given must be free and genuine.
Object for which the partnership is formed should
be lawful and comply with legal formalities.
6. Partnership deed Who can not be a partner
A document that outlines the
rights and responsibilities of
all partners.
Alien enemy
Contents: Minor
Provisions. Person of unsound mind
Principal place of business. Insolvent person
Name of firm. Members of Hindu
Undivided Family carrying
on family business.
Partner’s name and address.
Valuation of Goodwill
Duration of firm.
Profit sharing ratio.
7. General Partnership
A normal partnership agreement wherein, the liabilities
of all the partners is unlimited.
Exception is in case of minor partner whose liability is
limited to the amount of his/her share in the capital and
profits of the firm.
8. Partnership at Will
No provision in contract between the partners for
Duration of partnership
Determination of partnership.
• If any partner gives notice of dissolution in writing, the
partnership is dissolved.
9. Particular Partnership
A partnership formed for a specific time period or to
achieve a specified objective.
Automatically dissolved on the expiry of the specified
period or on the completion of the specific purpose.
10. Limited Liability Partnership (LLP)
A partnership in which some or all partners (depending
on the jurisdiction) have limited liability. Therefore, it’s
a combination of both partnership and company.
In India, LLPs are governed under the Limited Liability
Partnership Act, 2008.
11. Active Partner
A full-fledged partner.
Contributes to capital and takes active part in the
management of the firm.
Bears unlimited liability.
• Sleeping Partner
• Contributes to capital, but does not take active part in
management.
• Bears unlimited liability.
• Not known to outsiders.
12. Limited Partner
A partner limited to the extent of his/her share in capital
and profits.
Not entitled to take active part in the management of
firm’s business.
Partner in Profits only
Partner shares only the profits, not the losses.
Has unlimited liability.
Not allowed to take part in management.
13. Nominal Partner
Neither contributes capital nor takes part in
management. Only lends his name.
Does not have a share in profits or losses, but is liable to
outsiders for the debts.
A nominal partner can be of two types.
Partner by estoppels
Person who by his/her words (spoken/written) or
conduct represents himself/herself as a partner.
Such a partner is liable to outsiders.
14. Partner by holding out
A person who is declared as a partner and does not deny
this , even after becoming aware of it.
Such a partner is liable to outsiders.
Minor as a Partner
A minor is a person who has not completed 18 years of
age. A minor cannot become a partner because he is not
qualified to do so.
However, minor can be admitted to the benefits of the
partnership with the mutual consent of all partners.
15. Sub-Partner
A third person with whom a partner agrees to share his
profits desired from the firm.
Does not take part in the management of the firm.
Is not liable for the firm’s debts.
