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Partnership
Partnership is a form of business in whichPartnership is a form of business in which twotwo
or more but not more than twenty peopleor more but not more than twenty people owns aowns a
business. It is based on written contract or on an oralbusiness. It is based on written contract or on an oral
agreement.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.
Partnership
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”.
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.
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.
 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
 Absence of legal entity
 Non-transferability of
ownership
 Uncertainty of stability
Easy formation
More capital
Joint efforts
Collective decision
Efficient administration
Sharing of risk
Free from legal formalities
Facility of loan allocation
Flexibility
Reduce autocracy
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
Types of partnerships: 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.
There are two types of general partner :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.
# 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.
 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.
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 and administrative activities of the
business.
 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 loan.
 Who can be?
Any person who is qualified to make a
contract can be a partner of a partnership
business.
 Who can not be a partner?
A minor
A man of unsound mind
Mentally sick person
Insolvent person
Generally, minor can not 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.
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
k)Right of obtaining profit
l)Profit on capital
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 winding
up of a firm
 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
The partnership deed or agreement refers to a
document where all necessary terms and
conditions are written. It is a written
declaration of agreement among the partners.
Oxford dictionary of business, “Deed of
partnership is a partnership agreement drawn
up in the form of a deed”
Professor J.L. Hanson, “Deed of partnership is
a document drawn up to clarify the respective
positions of the partners in a business”.
Deed/agreement is the guideline for conducting
partnership business. All types of terms and
conditions must be included in the partnership
deed. Sound and smooth business operations
demand that partnership agreement should be
written and signed. This is not a legal binding
but a moral requirement. Such a contractual
written agreement is termed as ‘Articles of
partnership’. Written agreement reduces the
misunderstanding.
Written articles of agreement include the followings:
 Name of the partnership business.
 Types of business to be done.
 Location of the business.
 Expected life of the partnership.
 Names of the partners
 Amount of investment by each partner.
 Provision for taking loan for the different sources.
 Rate interest on debt and loan.
 Amount of salary to be provided to the active
partner.
 The address of the bank, where the bank account
will be open.
 Procedures of distributing profits and covering the
losses .
 Amounts those partners will withdraw for services.
 Procedures for withdrawal of funds.
 Provision for evaluating goodwill of the business.
 Duties of each partner.
 Procedures to hire in case of death or absent.
 Procedures of running the business.
 Provision for changing the partnership deed.
 Procedures for dissolving the partnerships.
 Provision for evaluating asset and liabilities through
dissolution of partnership business.
Deed is the fundament condition of a partnership
business. The pattern of partnership must be included
in the partnership deed. The rights and duties of a
partner must be included here. All the term and
conditions must also be included in the partnership
deed.
 Inherent right
 Joint family business
 Inheritors of dead partners
 Retired partner
 Profit receiving creditor
 Relation of status
 Social relation
Registration is a task of listing name of the
business in the registration office.
Actually registration of partnership
means the registration of partnership
deed . According to the Partnership Act ,
Section-58 (1) , registration is not
compulsory but encourages doing it.
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.
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
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.
There are various methods of dissolution:
 Dissolution by agreement: According to the
Partnership Act, section-41, by consent of all
the partners of business, it will be resolve any
time which was written in the partnership
deed.
 Compulsory dissolution: According to the
Partnership Act, section-41, the compulsory
dissolution take place under the following
circumstances: By the happening of an event
which makes it unlawful for the business. By
the adjudication of all the partners or of all
the partners but one as insolvent.
 Dissolution due to the happening of certain
contingencies : According to the Partnership
Act, section-42, dissolution under the
following circumstances: When the
partnership for a certain period of time, the
partnership business will dissolution after end
of the period. By the retirement of a partner to
business will be dissolved if there is no
agreement to the contrary. By the death of
one or more of the partners, unless there is a
contract to the contrary. The completion of a
particular adventure.
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 .
Thank You

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Partnership

  • 2. Partnership is a form of business in whichPartnership is a form of business in which twotwo or more but not more than twenty peopleor more but not more than twenty people owns aowns a business. It is based on written contract or on an oralbusiness. It is based on written contract or on an oral agreement.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. Partnership
  • 3. 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”.
  • 4. 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.
  • 5. 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.
  • 6.  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  Absence of legal entity  Non-transferability of ownership  Uncertainty of stability
  • 7. Easy formation More capital Joint efforts Collective decision Efficient administration Sharing of risk Free from legal formalities Facility of loan allocation Flexibility Reduce autocracy
  • 8. 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
  • 9. Types of partnerships: 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.
  • 10. There are two types of general partner :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.
  • 11. # 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.
  • 12.  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.
  • 13. 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 and administrative activities of the business.
  • 14.  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 loan.
  • 15.  Who can be? Any person who is qualified to make a contract can be a partner of a partnership business.  Who can not be a partner? A minor A man of unsound mind Mentally sick person Insolvent person
  • 16. Generally, minor can not 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.
  • 17. 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 k)Right of obtaining profit l)Profit on capital 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 winding up of a firm
  • 18.  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
  • 19. The partnership deed or agreement refers to a document where all necessary terms and conditions are written. It is a written declaration of agreement among the partners. Oxford dictionary of business, “Deed of partnership is a partnership agreement drawn up in the form of a deed” Professor J.L. Hanson, “Deed of partnership is a document drawn up to clarify the respective positions of the partners in a business”.
  • 20. Deed/agreement is the guideline for conducting partnership business. All types of terms and conditions must be included in the partnership deed. Sound and smooth business operations demand that partnership agreement should be written and signed. This is not a legal binding but a moral requirement. Such a contractual written agreement is termed as ‘Articles of partnership’. Written agreement reduces the misunderstanding.
  • 21. Written articles of agreement include the followings:  Name of the partnership business.  Types of business to be done.  Location of the business.  Expected life of the partnership.  Names of the partners  Amount of investment by each partner.  Provision for taking loan for the different sources.  Rate interest on debt and loan.  Amount of salary to be provided to the active partner.  The address of the bank, where the bank account will be open.  Procedures of distributing profits and covering the losses .
  • 22.  Amounts those partners will withdraw for services.  Procedures for withdrawal of funds.  Provision for evaluating goodwill of the business.  Duties of each partner.  Procedures to hire in case of death or absent.  Procedures of running the business.  Provision for changing the partnership deed.  Procedures for dissolving the partnerships.  Provision for evaluating asset and liabilities through dissolution of partnership business.
  • 23. Deed is the fundament condition of a partnership business. The pattern of partnership must be included in the partnership deed. The rights and duties of a partner must be included here. All the term and conditions must also be included in the partnership deed.  Inherent right  Joint family business  Inheritors of dead partners  Retired partner  Profit receiving creditor  Relation of status  Social relation
  • 24. Registration is a task of listing name of the business in the registration office. Actually registration of partnership means the registration of partnership deed . According to the Partnership Act , Section-58 (1) , registration is not compulsory but encourages doing it.
  • 25. 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.
  • 26. 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
  • 27. 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.
  • 28. There are various methods of dissolution:  Dissolution by agreement: According to the Partnership Act, section-41, by consent of all the partners of business, it will be resolve any time which was written in the partnership deed.  Compulsory dissolution: According to the Partnership Act, section-41, the compulsory dissolution take place under the following circumstances: By the happening of an event which makes it unlawful for the business. By the adjudication of all the partners or of all the partners but one as insolvent.
  • 29.  Dissolution due to the happening of certain contingencies : According to the Partnership Act, section-42, dissolution under the following circumstances: When the partnership for a certain period of time, the partnership business will dissolution after end of the period. By the retirement of a partner to business will be dissolved if there is no agreement to the contrary. By the death of one or more of the partners, unless there is a contract to the contrary. The completion of a particular adventure.
  • 30. 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 .