This document defines partnership and discusses its key characteristics. It notes that a partnership is a business owned by 2-20 people based on a written or oral contract, with partners sharing profits. Types of partnerships include general partnerships, where all partners actively participate, and limited partnerships, where some partners have limited liability. The document outlines rights and duties of partners, requirements for partnership registration, and methods for dissolving a partnership.

1. PARTNERSHIP

2. Made by : Rahul and Naman
Class : XI C2

3. DEFINITION
• Partnership is a form of business in
which two or more but not more than
twenty people owns a business. It is
based on written contract or on an
oral agreement. Partnership is the
relation between persons who have
agreed to share the profit of a
business carried on by all or any of
them acting for all, persons who
have entered into partnership with
one another are called individually
‘Partner’ and collectively a ‘firm’. –
Partnership Act-1932.

4. DEFINITIONS
BY OTHER
PEOPLE.
• S. E. Thomas : “A partnership is an
association of people who carry on
business together for the purpose of
making profit”.
• Professor 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 lawful commerce or business and
to divide the profit and bear the loss
in certain proportions”.

5. PLURALITY OF MEMBERS: MORE THAN ONE PERSON INVOLVE
WITH THE FORMATION OF PARTNERSHIP BUSINESS.
CONTRACTUAL RELATION : THE RELATIONSHIP OF PARTNERS
DEPENDS ON CONTRACT AMONG THEM.
LEGAL BUSINESS :THE BUSINESS MUST BE LEGAL IN THE EYE
OF LAW. TWO OR MORE THAN TWO PERSONS INVOLVE WITH THE
ILLEGAL BUSINESS IS NOT A PARTNERSHIP.
LAWFUL BUSINESS : THE PARTNERSHIP BUSINESS WHICH MUST
BE LEGAL IN THE EYE OF LAW.

6. • Earning and sharing profit: The
profit which is earned from the
partnership business must be
shared among the partners
according to the predetermine
ratio.
• Mutual organization: This is
the mutual organization where
each and every member freely
involves with the business.
• Mutual confidence and trust:
Partnership business formed
depends on mutual trust and
confidence.

7. • Easy formation
• Plurality of members
• Contractual relation
• Supply of capital
• Administration
• Unlimited liabilities
• Limitation of size
• Sharing of profit & loss
• Mutual trust and confidence
• Mutual agency
• Taking decision
• Recognition and control of law
• Registration

8. Easy formation
More capital Joint efforts
Collective decision
Efficient administration
Sharing of risk
Free from legal formalities
Facility of loan allocation
Flexibility
Reduce autocracy

9. • Unlimited liability
• Delay in decision making
• Administrative complexity
• Inefficient management
• Limitation of Capital
• Risk of joint responsibilities
• Lack of mutual trust
• Lack of team spirit
• Good efficient of mutual agency
• Facility of social connection

10. General partnership, Limited partnership.
General Partnership: A general partner has the authority to
act and making decision for all partners. Partners generally
share profits or losses as per the agreement made between
them.

11. • There are two types of general
partner : Partnership at will &
Particular partnership
• # Partnership at will : According
to the Partnership Act-1932,
Section-7, there is no specific
(fixed) time for winding up the
partnership business is called
partnership at will. This type of
partnership business will be form
by the following ways: a)
Partnership business for the
unlimited time. b) Partnership will
be continued for achieving
objectives.

12. # Particular partnership: According to the
Partnership Act-1932, Section-8, there must have
a fixed time and particular objectives for
conducting the partnership business is called
particular partnership. a) Partnership business for
a limited time. b) Partnership for achieving
specific objective.

13. Limited Partnership: A limited partnership includes more general partners
and one or more limited partners. The general partners arrange and run the
business while the limited partners are the investors only. Limited partners
receive special tax advantages. A limited partner has limited liability for loss
of business and liable only up to the amount of capital invested.

14. By viewing of nature, work, right,
duties and responsibilities, the
partners may classify into the
following ways:
• Active partner: The active partner
those partners who actively take part
in the management and
administrative activities of the
business.
• Dormant or sleeping partner : The
sleeping partners who are not
actively take part in the management

15. Nominal partner: A nominal partner is
a person who has permitted others
to believe that he is a partner. He
does not invest capital but he gives a
chance of using “Goodwill” of him.
Limited partner: A limited partner is a
partner whose liability is limited to
the amount that he paid to the
business.
Quasi partner: A quasi partner is a
partner who has withdrawal his
capital but keep it as a loan to the
business. He will get interest on his

16. •Who can be? Any person who is qualified to
make a contract can be a partner of a partnership
business.
•Who cannot be a partner? A minor A man of
unsound mind Mentally sick person Insolvent
person

17. MINOR AS A
PARTNER
Generally, minor cannot be a
partner. But it a partner is dead,
his/her sons or daughters can be
partners of the business.
They can enjoy the facilities and
profits. But as they are minors they
do not need to bear the
responsibilities of the business.

18. RIGHTS OF PARTNER
• a)Interest on loan
• b)Right to work as an
agent
• c)Right to introduce
• d)Right to retirement
• e)Right of not being
expelled
• f)Right in respect of
•g)Participation in the
conducting of business .
•h)Right of expressing
opinion
•i)Right to observe, inspect
and taking copy of the
documents
•j)Claiming remuneration

19. DUTIES
OF
PARTNE
R
•Fulfillment of duties with
diligence
•No claim of remuneration
•Proportionate bearing of loss
•Compensation of loss occurred
by willful neglect
•Surrender of profit earned from
the competitive business
•Performing the functions within
the authority
•Bearing unlimited liability

20. REGISTRATION OF A PARTNERSHIP
BUSINESS
• The contents of a application form for registration are as follows:
• Name of the partnership business
• Location of the business.
• Objectives of the business.
• Name, address and profession of the partners
• Amount of investment by each partner.
• Date of joining the partners.
• Starting date of partnership business.

21. CONSEQUENCES OF NON-REGISTRATION
• Case to the other partners
• Case to the third party
• Recovery of credit sales
• Arbitration is not possible
• Chance of quickly dissolution
• Cheating with other partners

22. DISSOLUTIO
N OF
PARTNERSHI
P BUSINESS
•Dissolution of
partnership may occur
when one of the
partners want to cancel
the contract or
according to the deed.
•Dissolution is distinct
from the termination of
partnership and the
‘Winding up’ of
partnership business.

23. METHODS OF DISSOLUTION OF PARTNERSHIP
BUSINESS
• Dissolution by notice: According to the Partnership Act, section-42, the
partnership business be resolve by giving notice to other partner.
• Dissolution by the court: In case, any partner give complain against one
or more of his co-partner, the court may dissolve the partnership on any
of the following grounds:
• If a partner becomes imbalance.
• If a partner becomes permanently incapable of doing work.
• If a partner frequently break of the partnership agreement.
• If a partner has transferred the whole or part of his interest to a third
party, which is not lawful .