this file contains laws to form partnership in business

1. Uzair A.K. Ghouri
Law of Partnership 1932Law of Partnership 1932
• IntroductionIntroduction
• CharacteristicsCharacteristics
• Types of PartnershipTypes of Partnership
• Test of PartnershipTest of Partnership
• FirmFirm
• RegistrationRegistration
• DissolutionDissolution

2. Uzair A.K. Ghouri
Law of Partnership 1932Law of Partnership 1932
• Definition (u/s: 4)Definition (u/s: 4)
– Voluntary association of two or more persons whoVoluntary association of two or more persons who
contribute money, property, time and skills to carrycontribute money, property, time and skills to carry
on business for profit and share losses.on business for profit and share losses.

3. Uzair A.K. Ghouri
Characteristics of PartnershipCharacteristics of Partnership
• Legal EntityLegal Entity
• AgreementAgreement
• Number of PartnersNumber of Partners
• Existence of BusinessExistence of Business
• Sharing of ProfitSharing of Profit
• Unlimited LiabilityUnlimited Liability
• CapitalCapital
• ManagementManagement
• Transfer of InterestTransfer of Interest
• ControlControl

4. Uzair A.K. Ghouri
Types of PartnershipTypes of Partnership
Types of Partnership contain three types which areTypes of Partnership contain three types which are
as follows:as follows:
1.1. Partnership-at-willPartnership-at-will
2.2. Particular PartnershipParticular Partnership
3.3. Limited PartnershipLimited Partnership

5. Uzair A.K. Ghouri
Test of PartnershipTest of Partnership
In order to determine the existence of partnership, theIn order to determine the existence of partnership, the
following must be proved:following must be proved:
1.1. There must be an agreement among the persons to beThere must be an agreement among the persons to be
held as partners.held as partners.
2.2. The agreement must be for doing some business.The agreement must be for doing some business.
3.3. The agreement must be to share profit of business.The agreement must be to share profit of business.
4.4. There must be a relationship of principal and agentThere must be a relationship of principal and agent
among the partners.among the partners.
5.5. There must be an agreement to carry on the businessThere must be an agreement to carry on the business
by all or any of them acting for all.by all or any of them acting for all.

6. Uzair A.K. Ghouri
FirmFirm
Definition:Definition:
The persons who have entered into a partnershipThe persons who have entered into a partnership
with one another are Collectively called a Firm.with one another are Collectively called a Firm.
1.1. Registration of Firm (not essence)Registration of Firm (not essence)
2.2. Existence of FirmExistence of Firm
3.3. No separate legal entityNo separate legal entity

7. Uzair A.K. Ghouri
Procedure of Registration (notProcedure of Registration (not
compulsory)compulsory)
• Application is submitted with initials of all partners.Application is submitted with initials of all partners.
Application must contain:Application must contain:
1.1. NameName
2.2. PlacePlace
3.3. ObjectObject
4.4. Address of the PartnersAddress of the Partners
5.5. Duration (if any)Duration (if any)
Registrar if satisfied will registered the Firm.Registrar if satisfied will registered the Firm.

8. Uzair A.K. Ghouri
Dissolution of FirmDissolution of Firm
When relationship between all partners come to an end.When relationship between all partners come to an end.
Effects will occurs on dissolution on registered firmEffects will occurs on dissolution on registered firm
and non-registered firm.and non-registered firm.
1.1. Suit by PartnerSuit by Partner
2.2. Suit by FirmSuit by Firm
3.3. Suit by Firm against PartnerSuit by Firm against Partner
4.4. Suit by Third PartySuit by Third Party
5.5. No Claim for AdjustmentNo Claim for Adjustment

9. Uzair A.K. Ghouri
Dissolution of PartnershipDissolution of Partnership
• Dissolution of Partnership is different fromDissolution of Partnership is different from
dissolution of a Firm. When one Partner dies,dissolution of a Firm. When one Partner dies,
retires or becomes insolvent but the remainingretires or becomes insolvent but the remaining
partners continue the business, it is said to bepartners continue the business, it is said to be
dissolution of Partnership (dissolution of Partnership (dissolution of firmdissolution of firm
includes the dissolution of partnership, but the dissolutionincludes the dissolution of partnership, but the dissolution
of partnership may or may not include the dissolution ofof partnership may or may not include the dissolution of
the firmthe firm.).)

10. Uzair A.K. Ghouri
Dissolution of PartnershipDissolution of Partnership
• Dissolution of Partnership is different fromDissolution of Partnership is different from
dissolution of a Firm. When one Partner dies,dissolution of a Firm. When one Partner dies,
retires or becomes insolvent but the remainingretires or becomes insolvent but the remaining
partners continue the business, it is said to bepartners continue the business, it is said to be
dissolution of Partnership (dissolution of Partnership (dissolution of firmdissolution of firm
includes the dissolution of partnership, but the dissolutionincludes the dissolution of partnership, but the dissolution
of partnership may or may not include the dissolution ofof partnership may or may not include the dissolution of
the firmthe firm.).)