Define the partnership and its salient features.

FATIMIYAH HIGHER EDUCATION
SYSTEM
Faculty of Business Management- FHES

FATIMIYAH HIGHER EDUCATION
SYSTEM
Course Title:
Faculty Name:
Credit Hours:
Introduction to Business
Dr. Muhammad Hussain
02
Semester: 01

PARTNERSHIP
A partnership is a type of business structure in which two or more
individuals manage and operate a business in accordance with the
terms and objectives set out in a Partnership Deed (also known as a
partnership agreement). Each partner contributes resources, such as
money, property, skills, or labor, and shares in the profits and losses
of the business.

 A partnership is a formal arrangement in which two or
more parties cooperate to manage and operate a business.
 Partnership is a form of business in which two or more but
not more than twenty people own a business. It is based on
written contract or on an oral agreement.

 S.E. Thomas, “A partnership is a association of people who
carry on business together for the purpose of making
profit”.
 Prof. Kant, “Partnership is a contract of two or more
competent persons to place their money, efforts, labor and
skill, or some or all of them in and bear the loss in certain
proportions”.

 Mutual Agreement: A partnership is formed by an agreement
between two or more persons who intend to carry on a business
together and share its profits and losses.
SALIETN FEATURES OF PARTNERSHIP
 Legal Relationship: Partnerships create a legal relationship between
the partners. This relationship is governed by the terms of the
partnership agreement and relevant laws.

 Contribution of Capital and Skills: Each partner typically contributes
capital, assets, or skills to the partnership. These contributions may
vary depending on the terms agreed upon in the partnership
agreement.
 Shared Profits and Losses: Partnerships involve the sharing of profits
and losses among the partners according to the agreed-upon ratio.
This sharing is usually based on the contributions made by each
partner or as specified in the partnership agreement.

 Unlimited Liability: In a general partnership, partners have unlimited
liability, meaning they are personally liable for the debts and
obligations of the partnership. This means that their personal assets
can be used to satisfy the partnership's debts and liabilities.
 Management and Decision Making: Partnerships allow for shared
management and decision-making responsibilities among the
partners, unless otherwise specified in the partnership agreement.
Partners typically have equal say in the operation of the business.

 Shared Responsibilities and Expertise: Partnerships allow for the
pooling of resources, skills, and expertise. Each partner brings unique
strengths to the table, enabling the business to benefit from a
diverse skill set.
ADVANTAGES OF PARTNERSHIP
 Shared Financial Burden: In a partnership, partners share the
financial burden of starting and running the business. This can make
it easier to raise capital and invest in the growth of the business.

 Risk Sharing: Partnerships distribute the risks associated with
business operations among the partners. If one partner faces
financial difficulties or the business encounters challenges, the
burden is shared among all partners, reducing individual risk.
 Flexibility and Agility: Partnerships tend to have fewer formalities and
regulations compared to corporations. This flexibility allows partners
to make decisions quickly and adapt to changing market conditions
more efficiently.

BREAK!

 Synergy: Partnerships can benefit from synergies created by
combining the strengths of multiple partners. This synergy can lead
to increased innovation, productivity, and competitiveness.
 Longevity: Partnerships can benefit from the stability and longevity
of multiple partners working towards common goals. With the right
partners and a strong partnership agreement in place, businesses can
thrive over the long term.

 Shared Decision Making: Partnerships require consensus among the
partners for major decisions. Disagreements or conflicts among
partners can slow down decision-making processes and hinder the
efficient operation of the business.
DIS-ADVANTAGES OF PARTNERSHIP
 Potential for Conflict: Differences in management styles, work ethics,
or long-term goals can lead to conflicts among partners. Resolving
these conflicts may require compromise and can strain the
relationship between partners.

 Shared Profits: While sharing profits can be an advantage, it also
means that each partner receives a smaller portion of the profits
compared to sole proprietors or owners of other business structures.
 Dependency on Partners: Partnerships rely on the contributions and
commitments of all partners. If one partner decides to leave the
business or becomes unable to contribute, it can disrupt operations
and affect the overall success of the partnership.

 Limited Growth Potential: Partnerships may face limitations in raising
capital compared to corporations. Without access to additional
capital, it can be challenging for partnerships to expand or invest in
growth opportunities.
 Difficulty in Ending the Partnership: Dissolving a partnership can be
complex and may require legal proceedings, especially if partners
disagree on how to divide assets, settle debts, or handle ongoing
obligations. This process can be time-consuming and costly.

Partnership agreements are legal documents that outline the terms
and conditions under which two or more individuals or entities agree
to operate a partnership. These agreements are essential for clarifying
the rights, responsibilities, and expectations of each partner involved in
the business
PARTNERSHIP AGREEMENT

 Partners' Identities: The agreement should clearly identify the
parties involved in the partnership, including their names,
addresses, and roles within the partnership.
 Business Purpose: It outlines the purpose or objectives of the
partnership, including the nature of the business activities it will
engage in.

 Capital Contributions: Partners often contribute capital to the
partnership to fund its operations. The agreement specifies each
partner's initial contribution and may outline procedures for
additional contributions in the future.
 Profit and Loss Allocation: The agreement outlines how profits and
losses will be distributed among the partners. This can be based on
each partner's ownership percentage or according to other criteria
agreed upon by the partners.

Partnerships can come in various forms depending on the context,
purpose, and nature of the relationship.
KINDS OF PARTNERS
 Business Partners: Individuals or entities who join together to run a
business venture, sharing responsibilities, profits, and risks.
 Strategic Partners: Organizations that form a collaborative
relationship to achieve mutual goals, often leveraging each other's
strengths, resources, or market positions.

KINDS OF PARTNERS
 Joint Venture Partners: Companies or entities that pool resources to
undertake a specific project or business activity for a finite period.
 Investment Partners: Individuals or entities who contribute capital to
a venture in exchange for ownership stakes or returns on
investment.
 Technology Partners: Entities that collaborate to develop or
integrate technologies, products, or services.

KINDS OF PARTNERS
 Channel Partners: Businesses or individuals who assist in the
distribution, sales, or marketing of products or services, often
through reselling or acting as intermediaries.
 Supplier Partners: Companies that provide goods or services to
another organization, forming a partnership to ensure a reliable
supply chain or to develop mutually beneficial arrangements.

THANK YOU!

Define the partnership and its salient features.

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