To form a partnership under law, there must be a business, agreement to share profits, and business must be carried on by all or any partners acting for the whole. Partnerships have advantages like ease of establishment and ability to raise funds and attract employees through partnership incentives. However, partnerships also have disadvantages like joint and individual liability for partner actions, need to share profits, potential for disagreements, limitations on size and life of partnership, and requirement for consultation between partners.

1. Partnership Law
To 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 all
Advantages
 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.