its is based project of procedure.if there is no aims and objective you want to write in own word which can be give by teachers.

1. Project of …
INTRODUCTION
A partnership is an arrangement where parties, knownas partners, agree to cooperateto advance their mutual
interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools,
governments or combinations. Organizations may partner together to increase the likelihood of each achieving their
mission and to amplify their reach. A partnership may result in issuing and holding equity or may be only governed
by a contract.Partnerships present the involvedparties with complex negotiation and special challenges that must be
navigated unto agreement. Overarchinggoals, levels of give-and-take, areas of responsibility, lines of authority and
succession, how success is evaluated and distributed, and often a variety of other factors must all be negotiated. Once
agreement is reached, the partnership is typically enforceable by civillaw, especially if welldocumented. Partners
whowish to make their agreement affirmatively explicit and enforceable typically draw up Articles of Partnership.
Trust and pragmatism are also essential as it cannot be expected that everything can be written in the initial
partnership agreement, therefore quality governance and clear communication are criticalsuccess factorsin the long
run. It is common for information about formally partnered entities to be made public, such as through a press
release, a newspaper ad, or public records laws.
While industrial partnerships stand to amplify mutual interests and accelerate success, some are collaboration
may be considered ethically problematic. When a politician, forexample, partners with a corporation to advancethe
latter's interest in exchange forsome benefit, a conflictof interest results; consequentially, the public good may
suffer. While technically legal in some jurisdictions, such practice is broadly viewed negatively or as corruption.
Governmentally recognized partnerships may enjoy special benefits in tax policies. Among developed countries,
for example, business partnerships are often favoredover corporations in taxation policy,since dividend taxes only
occuron profit before they are distributed to the partners. However, depending on the partnership structure and the
jurisdiction in whichit operates, owners of a partnership may be exposed to greater personal liability than they
would as shareholders of a corporation. In such countries, partnerships are often regulated via anti-trust laws,so as
to inhibit monopolistic practices and foster free market competition. Enforcementof the laws, however, varies
considerably. Domestic partnerships recognized by governments typically enjoy tax benefits, as well. For example, a
person wholacks managerial skills but may have capital. Another person whois a good manager but may not have
capital. When these persons cometogether, pool their capital and skills and organize a business, it is called
partnership. Partnership grows essentially because of the limitations or disadvantages of proprietorship.
The proprietorship form of ownership suffers fromcertain limitations such as limited resources, limited skill
and unlimited liability. Expansion in business requires more capital and managerial skills and also involvesmore risk.
A proprietor finds him unable to fulfillthese requirements. This call formore persons come together, withdifferent
edges and start business.
MEANING & DEFINITION
According to J. L. Hanson, “a partnershipis a form of businessorganisationin which two or more persons
up to a maximum of twenty join togetherto undertakesome form of businessactivity”. Now, we can define
partnershipas an association of two or more personswho have agreed to share the profits of a business
which they run together.This businessmay be carried on by allor anyone of them acting for all.

2. The persons who own the partnershipbusiness are individually called ‘partners’and collectively they are
called as ‘firm’ or ‘partnershipfirm’. The name under which partnershipbusinessis carried on is called‘Firm
Name’. In a way, the firm is nothing butan abbreviation for partners.
The Indian PartnershipAct, 1932, Section 4, defined partnershipas “the relationbetween personswho
have agreed to share the profits of businesscarried on by allor any of them acting for all”. The Uniform
PartnershipAct of the USA defined a partnership“as an association of two or more personsto carry onas co-
owners a business for profit”.
 Aims and objectives arewritteninownword
NEEDS AND IMPORTANCE
When two or more individuals come together to form a business partnership, for example a Limited
Partnership or Limited Liability Partnership, it is advisable to have a correctly drafted Partnership Agreement
carefully detailing the terms of the business relationship. When two or more people go into business together, it is
important for them to agree to and enter into a formal written agreement for a partnership or partnership
agreement. A corporation's shareholders would be governed by its shareholders agreement and an LLC's members
by its operating agreement.
For partnerships, in particular, it is important to have some type of written agreement, whether it is a
partnership agreement or a buy-sell agreement. Partnerships are one of two business entities in New Jersey (sole
proprietorship being the other), which do not require a formal filing with the secretary of state in order to exist. The
law recognizes a partnership based on the activities of the partners. If two or more people are in business together
and are sharing in profits.
THE IMPORTANCE OFPARTNERSHIP AGREEMENTS
 AVOID CONFLICT
A Partnership Agreement helpsto avoid conflictwhich may arise between thepartners.Where the termsof a
partnership arenotclearly set outand recorded,disputesmay ariseover ownership division,therolesand responsibilities of
the partners,and thedivision of assetsupon termination of the partnership.
 GetItInWriting
It is highly recommended thatthepartnersenter into a formalwritten agreementassisted by professionaladvisersto
ensurethatthe partnership is created and managed correctly while avoiding conflictsbetween thepartners.
In theabsenceof a written agreement,disputeswill often resultin costly legal proceedingsand unnecessary financialloss
forall parties.
 LegallyBinding
A Partnership Agreementisa legally binding documentand allows thepartnersto structurethe relationship in a way
thatsuits their particularbusiness.Ittypically establishesthe rightto sharein profitsor losses foreach partner,the
responsibilitiesof each partner,and properproceduresforchangesto and termination of thepartnership.
 Areas CoveredByA Partnership Agreement
The following are the main areas that should be covered in any Partnership Agreement:
 Name of the Partnership, details of the Partners and their designation.
 Business Activities: The primary business of the partnership should be clearly set out in the agreement together with
any restrictions on the type of business or activities that the partnership may undertake.
 Management of the Partnership: Who is responsible for the management of the partnership? This ensures that the
roles and responsibilities of the partners are clearly defined.
 Meetings of the Partners: Who is entitled to attend and vote at meetings? What is proper notice?
 Capital Contribution: It is important to agree and record the capital contributions and percentage ownership of each
of the partners, if any. This will avoid disputes over ownership division.
 Profit Distribution: As all partnerships are different and may have different profit distribution criteria, it is important to
clearly set these out in the Partnership Agreement.
 Financial Reporting and Taxation: The responsibilities and procedures for preparing and maintaining proper books of
accounts and filing tax returns should be set out in the agreement.
 Transfers of Partnership Interests: The procedure for when a partner wishes to transfer their interest in the
partnership. For example, written consent may be required from all of the partners otherwise the transfer is consider ed
to be void by the terms of the agreement.

3.  Termination of Partnership: Partnership Agreements should set out the terms on which the partnership can be
terminated and how assets and interests are dealt with upon termination.
 Resolving Disputes: Rather than pursue costly legal proceedings, a Partnership Agreement may provide for alternative
dispute resolution such as mediation and arbitration.
 ProtectTheBenefits
Structured correctly, LimitedPartnershipsand LimitedLiabilityPartnershipscanenjoy significanttaxand
confidentialitybenefitsinjurisdictionssuchasCanada,NewZealandand the UnitedKingdom.
However, in the absenceof a correctly drafted PartnershipAgreement, these benefitsmay be negated by minordisputes
whichwouldotherwise be avoidedbythe terms of a written agreement.
Giventhe above andthe number ofissuesto be considered,it is stronglyadvisedthat professional
advice issoughtto drafta PartnershipAgreement that best suitsyour client’sexpectations,so that they can enjoythe
full benefitsof a partnershipstructure.
method and methodologygivenby teacher
MainInformation
Features of partnership firms
The features of partnership firms are described in brief as follows:-
(1) Agreement: Agreement is the base of partnership. Without agreement there cannot be partnership. The
partnership comes into existence by an agreement or contract (oral or written). The purpose of agreement
should be for business & profit. Partnership is result of agreement but not by birth or any other relation.
The agreement may be oral or written. But it is advisable to have written agreement because it has legal
importance & it can be produced as evidence in the court of law to settle the dispute which may take place
among the partners in the future.
(2) Sharing of Profits: The main object of partnership is to make profit & to share these profit either
equally or as per agreement. If agreement is silent then they share profit equally as provided in the "Indian
Partnership Act, 1932". The nonprofit making organization cannot be called as partnership.
(3) Presence of Lawful Business: The business of the partnership firm should be for profit making & also
it should be as per the law of land. A partnership firm cannot perform charitable activities.
(4) Number of Partners: The single individual cannot start partnership. There must be at least two or
more persons to start a partnership business. According to Indian Partnership Act, 1932, a partnership firm
running 'Banking' business require minimum two members & it can have maximum ten members and a
partnership firm running 'Non Banking / General' business cannot have more than twenty members.
(5) Common (Joint) Management: All partners of partnership can take active part in the management. It
means partnership has common management. But practically it is not possible & convenient. Therefore it is
managed by one or two partners on behalf of all other partners.
(6) Agency Relation: The partners of partnership firm acts in double capacity i.e. as a Principal & as an
Agent. He can take part in the management, he can inspect books of accounts, he can share profits and
losses, etc. Every partner has a right to deal with outsiders in the capacity of the principal & to other
partners, every partner is an agent.
(7) Unlimited Liability: In India all partnership firms are general partnerships & the liability of every
partner is unlimited. In other words the liability of each and every partner is joint several and unlimited i.e.
all partners are collectively responsible for the payments of liabilities of the firm & even their personal
property can be utilized for recovery of debts of the firm.

4. (8) No Transfer of Interest (Ownership): In partnership firm, the partners cannot transfer his interest to
any other person or to any legal representative as per his own wish i.e. without the consent of other
partners. There is restriction on admission & retirement of any partner. Any changes in partners a re done
as per the agreement, and or with the consent of all partners.
(9) Mutual Trust: It means the trust and confidence of partners in each other. Each partner has to work in
the best interest of his firm. He must get full confidence & good faith of his partners. He should not make
any secret profit & must disclose all the information which is directly or indirectly related to the business.
(10) Team Spirit: Team spirit means co-operation & co-ordination with each other. There must be co-
operation & co-ordination among all the partners. Each partner is the trustee of other partner. He must give
true account of all his dealings in the partnership.
(11) Dissolution: The partnership can be easily dissolved at any time if the partners agree to do so. It gets
dissolved automatically, in case of death, insolvency or insanity of any of the partner. It gets dissolved if all
the partners are declared insolvent or they resign from the partnership.
(12) Registration: The registration of partnership firm is not compulsory. The partners may register the
firm with the registrar of firms of the state. However, in the state of Maharashtra, registration of
partnership is compulsory. The partners & the firm are benefited by registration.
ADVANTAGES OF partnership firms
As an ownership form of business, partnership offers the following advantages:
1. Easy Formation: Partnership is a contractual agreement between the partners to run an enterprise.
Hence, it is relatively ease to form. Legal formalities associated with formation are minimal. Though, the
registration of a partnership is desirable, but not obligatory.
2. More Capital Available: We have just seen that sole proprietorship suffers from the limitation of
limited funds. Partnership overcomes this problem, to a great extent, because now there are more than one
person who provide funds to the enterprise. It also increases the borrowing capacity of the firm. Moreover, the
lending institutions also perceive less risk in granting credit to a partnership than to a proprietorship because the
risk of loss is spread over a number of partners rather than only one. .
3. Combined Talent, Judgement and Skill: As there are more than one owners in partnership, all the
partners are involved in decision making. Usually, partners are pooled from different specialized areas to
complement each other. For example, if there are three partners, one partner might be a specialist in
production, another in finance and the third in marketing. This gives the firm an advantage of collective expertise
for taking better decisions. Thus, the old maxim of “two heads being better than one” aptly applies to
partnership.
4. Diffusion of Risk: You have just seen that the entire losses are borne by the sole proprietor only but in
case of partnership, the losses of the firm are shared by all the partners as per their agreed profit-sharing ratios.
Thus, the share of loss in case of each partner will be less than that in case of proprietorship.
5. Flexibility: Like proprietorship, the partnership business is also flexible. The partners can easily appreciate
and quickly react to the changing conditions. No giant business organization can stifle so quick and creative
responses to new opportunities.
6. Tax Advantage: Taxation rates applicable to partnership are lower than proprietorship and company
forms of business ownership.
Disadvantages OF partnership firms

5. Disadvantages are as follows:
1. Unlimited Liability: In partnership firm, the liability of partners is unlimited. Just as in proprietorship, the
partners’ personal assets may be at risk if the business cannot pay its debts.
2. Divided Authority: Sometimes the earlier stated maxim of two heads better than one may turn into “too
many cooks spoil the broth.” Each partner can discharge his responsibilities in his concerned individual area. But,
in case of areas like policy formulation for the whole enterprise, there are chances for conflicts between the
partners. Disagreements between the partners over enterprise matters have destroyed many a partnership.
3. Lack of Continuity: Death or withdrawal of one partner causes the partnership to come to an end. So, there
remains uncertainty in continuity of partnership.
4. Risk of Implied Authority: Each partner is an agent for the partnership business. Hence, the decisions made
by him bind all the partners. At times, an incompetent partner may lend the firm into difficulties by taking wrong
decisions. Risk involved in decisions taken by one partner is to be borne by other partners also. Choosing a
business partner is, therefore, much like choosing a marriage mate life partner.
5.Profit Sharing – Partners share the profits equally. This can lead to inconsistency where one or more
partners aren’t putting a fair share of effort into the running or management of the business, but still reaping the
rewards.
TYPEs OF Partners
The different kinds of Partners that are found in Partnership Firms are as follows:
1. Active or managing partner: A personwhotakes active interest in the conduct andmanagement of the
business of thefirmis known as activeor managingpartner. He carries onbusiness onbehalf ofthe other partners.If
he wants to retire,he has to givea public noticeof his retirement; otherwise hewill continue to beliablefor the acts of
the firm.
2. Sleeping or dormant partner: A sleepingpartner is a partnerwho‘sleeps’,thatis, he does not takeactive
part in the managementof thebusiness. Such a partneronlycontributesto the share capital of thefirm, is boundby the
activities of otherpartners, and shares theprofits andlosses of thebusiness. A sleepingpartner, unlike anactive
partner, is not required togive a publicnotice of his retirement. As such, he will notbe liable to thirdpartiesfor theacts
done afterhis retirement.
3. Nominal or ostensible partner: A nominal partner is onewhodoesnot haveany real interest in the
business but lends his name to the firm, without any capital contributions, and doesn’t share theprofits of thebusiness. He
also does not usually have a voice in themanagement of thebusiness ofthe firm,but heis liable to outsiders asan actual
partner.
4. Partner by holding out: If a person, by his wordsor conduct, holds out to anotherthat he is a partner, hewill
be stoppedfromdenyingthathe is not a partner.The person whothus becomes liableto third partiesto pay the debts of the
firmis known as a holding out partner. There are twoessential conditions for theprinciple of holding out : (a)the person to
be held out must have made therepresentation, by wordswrittenor spoken orby conduct,thathe was a partner ; and(b)
the other partymust provethat he had knowledgeof the representation and actedon it, forinstance, gavethe credit.
5. Partner in profits only: When a partner agreeswith theothers that he wouldonly share theprofitsof thefirm
and would notbe liable forits losses, heis in own as partner in profits only.
6. Minor as a partner: A partnershipis created by anagreement. Andif a partner is incapableof enteringintoa
contract,he cannot become a partner. Thus, at thetime of creationof a firma minor (i.e.,a personwhohas not attainedthe
age of 18 years) cannot beoneof theparties to thecontract.But undersection30 of the IndianPartnershipAct, 1932, a

6. minor ‘can be admittedto thebenefits of partnership’, with theconsent ofall partners. A minor partner is entitledto his share
of profits andto have accessto theaccounts ofthe firmforpurposes of inspection and copy.He, however, cannot filea suit
against thepartnersof thefirmfor hisshare of profit andproperty as long ashe remainswith thefirm. His liability in the firm
will be limited to the extent of his share in thefirm, and his private propertycannot be attached by creditors.
On his attainingmajority,he hasto decidewithinsix months whetherhe will becomeregular partnerof
withdraw frompartnership. Thechoice in eithercaseis to be intimated through a public notice, failingwhichhe will be
treated to havedecided to continueas partner, and hebecomespersonally liable like other partners for all thedebtsand
obligations of thefirmfromthe date ofhis admissionto its benefits (andnotfromthedateof his attainingtheageof
majority). He alsobecomes entitled to file a suit against otherpartners forhis shareof profit and property.
7. Secret partners: In partnership firms,several othertypes of partners are also found, namely,secretpartnerwho
does not wantto disclosehis relationshipwith the firmto thegeneral public. Outgoing partner, who retires voluntarilywithout
causing dissolutionof thefirm, limited partnerwho is liable only up to the value ofhis capital contributionsin the firm, and
the like. However,the moment publiccomesto knowof it he becomes liableto themfor meeting debtsof thefirm. Usually,
an outgoing partneris liablefor all debts andobligations as are incurred beforehis retirement. A limited partner is foundin
limited partnershiponly and not in general partnership.
A partnership is formed by an agreement, which may be either
written or oral. When the written agreement is duly stamped and
registered, it is known as "Partnership Deed". Ordinarily, the rights,
duties and liabilitiesof partners are laid down in the deed. But in the
case where the deed does not specify the rights and obligations, the
provisions of the INDIAN PARTNERSHIP ACT, 1932 willapply. The deed
generally contains the following particulars:
Ø Name of the firm.
Ø Nature of the business to be carried out.
Ø Names of the partners.
Ø The town and the place where business will be
carried on.
Ø The amount of capital to be contributed by each
partner.
Ø Loans and advances by partners and the interest
payable on them.

7. Ø The amount of drawings by each partner and the
rate of interest allowed thereon.
Ø Duties and powers of each partner.
Ø Any other terms and conditions to run the business.
CONCLUSION
A partnershipis anarrangement where parties,known aspartners, agree to cooperate to advancetheir
mutual interests. The partners in a partnershipmay be individuals,businesses,interest-basedorganizations,schools,
governmentsor combinations.Organizationsmaypartnertogether to increase the likelihoodofeach achievingtheir
missionandto amplifytheir reach. A partnershipmay result inissuingandholdingequityor may be onlygoverned by a
contract. Partnershipspresent the involvedparties withcomplex negotiationandspecial challengesthatmust be
navigateduntoagreement. Overarchinggoals,levels of give-and-take,areasofresponsibility,linesofauthorityand
succession,howsuccess is evaluatedand distributed,andoftena variety of other factors must all be negotiated.Once
agreement is reached, the partnershipis typicallyenforceableby civil law,especiallyif well documented. Partnerswho
wishto make their agreement affirmativelyexplicitandenforceabletypicallydrawup Articles ofPartnership.
A partnershipis formedby an agreement, whichmay be either written or oral. Whenthe written
agreement is dulystamped andregistered, it is knownas "PartnershipDeed". Ordinarily,therights, dutiesand liabilities
of partners are laiddown inthe deed. But in the case where the deed does not specifythe rightsand obligations,the
provisionsofthe INDIAN PARTNERSHIP ACT, 1932 will apply. Partnershiprefers to an agreement between personsto
share their profitsor losses arisingonaccount ofactionscarried by all or one ofthem actingon behalfofall. The person s
who have entered such an agreement are called partners andgive their collectivebusinessa name, whichis necessarily
their firm-name.
The IndianPartnershipAct, 1932 isan act enacted by the ParliamentofIndiato regulate partnershipfirms inIndia.It
received the assentof the Governor-General on8 April 1932 and came intoforce on 1 October 1932. Before the
enactment of thisact, partnershipswere governed by the provisionsofthe IndianContractAct. The act is administered
throughthe MinistryofCorporate Affairs.The act is not applicabletoLimited LiabilityPartnerships,sincethey are
governed by the Limited liabilityPartnershipAct,2008.
The term 'partnership' isdefinedunder section4 of Indianpartnershipact 1932 as under "Partnershipisan
agreement between two or more persons whohave agreed to share profitsofthe businesscarriedon by all or anyone of
them actingupon all."

8. Partnershiprefers to an agreement between personsto share their profitsor lossesarisingon accountof
actionscarried by all or one ofthem acting onbehalfof all.The personswho have entered suchan agreement are called
partners and givetheir collective businessaname, whichis necessarilytheir firm-name.Thisrelation between partners
arises outof a contract or an agreement, which meansa husbandandwife carryingon a businessor members of a Hindu
undividedfamilyarenot into partnership.The share of profitsreceived by any individual fromthefirm, moneyreceived
by a lender of money,salaryreceived by a worker or a servant,annuityreceived by a widowor a childof a deceased
partner, does not make them a partner of the firm.
 REFERENCE
1. https://en.wikipedia.org/wiki/The_Indian_Partnership_Act,_1932
2. http://www.charteredclub.com/partnership-firm/
3. http://www.quickbooks.in/r/legal/registration-procedure-for-partnership-firms-in-india/
4. http://www.slideshare.net/ashutoshpratap/partnership-act
5. http://www.slideshare.net/anildhankhar47/indian-partnership-act-1932-1
6. http://www.yourarticlelibrary.com/partnership-firms/partnership-firms-definition-features-advantages-
and-disadvantages/40804/
7. http://www.vakilno1.com/howto/contentspartnership.html
8. https://www.indiafilings.com/learn/partnership-firms-in-india/