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Partnership law

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Partnership law

  1. 1. Partnership LawTo constitute a partnership there must be three essentials ◦ There must be a business ◦ There must be an agreement to share the profits of that business ◦ The business must be carried on by all or any of the partners acting for allAdvantages  Partnerships are relatively easy to establish  With more than one owner, the ability to raise funds may be increased  Prospective employees may be attracted to the business if given the incentive to become a partner  A partnership may benefit from the combination of complementary skills of two or more people. There is a wider pool of knowledge, skills and contacts.  Partnerships can be cost-effective as each partner specializes in certain aspects of their business.  Partnerships provide moral support and will allow for more creative brainstorming.Disadvantages  Business partners are jointly and individually liable for the actions of the other partners.  Profits must be shared with others.  Since decisions are shared, disagreements can occur.  The partnership may have a limited life; it may end upon the withdrawal or death of a partner.  A partnership usually has limitations that keep it from becoming a large business.  A partner has to consult his partner and negotiate more as you cannot make decisions by yourself.  A major disadvantage of a partnership is unlimited liability. General partners are liable without limit for all debts contracted and errors made by the partnership.

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