3. Partnership
• is a
– Business organisation owned by two or more persons called
partners for the purpose of making a profit
– Potential business persons choose to form a partnership
company
– They choose to do so rather than forming a sole trading
company or corporation because
• The skills and the experience of partners are combined
• It is easier to form
• Decision making is easier
• of the freedom from observing government regulations and
restrictions
4. Partnership
• Features of a partnership company -Voluntary association
• Where
– Two or more persons coming to together to form a
partnership company voluntarily and not by force
(agreement can be made by a handshake)
– They continue in the business as long as they like and
leaves the company freely
6. Partnership
• Features of a partnership company – mutual agency
• Where
– Each partner can act or do business on behalf of the
partnership company
– The business conducted by any partner on behalf of the
company is binding (that is all partners are bound into
the contract)
8. Partnership
• Features of a partnership – unlimited liability
• Where
– Each partner is personally and individually liable for all
partnership liabilities
– Creditors first use the partnership assets to settle claims
– If the partnership assets are insufficient, they will seek
settlement of claims from any of the partners personal
resources
10. Partnership
• Features of a partnership – limited life
• Where
• A partnership company may end voluntarily at any time for
example when
o a new partner is admitted
o a partner withdraws
• It may also end involuntarily by
o The death of a partner
o Incapacity of a partner
12. Partnership
• Features of a partnership – Co-ownership of property
• Where
– Partnership assets are owned jointly by the partners of a
company
– If for some reason the partnership company has to close
down, each partner has claim on the total assets equal
to the balance on his or her respective capital accounts