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    Nature of Partnership

    Uploaded by

    Deepanshu Joshi

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Nature of Partnership

    Uploaded by

    Deepanshu Joshi
    1 views5 pages

    Copyright

    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    1 views5 pages

    Nature of Partnership

    Uploaded by

    Deepanshu Joshi

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    Nature of Partnership

    The nature of a partnership, as defined by the Indian


    Partnership Act, 1932, and generally understood in business law,
    encompasses several key characteristics:
    • Voluntary Association: A partnership is formed voluntarily by individuals
    who agree to carry on a business together with a view to making a profit.
    Unlike corporations, which may be formed by governmental authorization,
    partnerships are created by the mutual consent of the partners.
    • Agreement: A partnership is based on an agreement between two or more
    persons to carry on a business together and share the profits and losses
    thereof. This agreement may be written or oral, although a written
    agreement is often recommended to avoid disputes and clarify the terms of
    the partnership.
    • Profit Sharing: One of the defining features of a partnership is the sharing of
    profits and losses among the partners. Each partner contributes capital, labor, or
    skill to the business and is entitled to a share of the profits generated by the
    partnership. Likewise, partners are also responsible for bearing a proportionate
    share of any losses incurred.
    • Mutual Agency: Partners in a partnership act as agents for one another and for
    the partnership as a whole. This means that each partner has the authority to bind
    the partnership to contracts and agreements entered into in the ordinary course of
    business. However, partners are also jointly and severally liable for the debts and
    obligations of the partnership.
    • Unlimited Liability: One of the significant characteristics of a partnership is that
    partners have unlimited personal liability for the debts and obligations of the
    partnership. This means that creditors can pursue the personal assets of individual
    partners to satisfy the debts of the partnership, subject to certain limitations and
    exceptions under the law.
    • Shared Management and Control: Unless otherwise specified in the partnership
    agreement, partners typically have an equal say in the management and decision-
    making of the partnership. However, this can vary depending on the specific terms
    of the partnership agreement and the contributions and responsibilities of each
    partner.
    • Continuity and Dissolution: A partnership is generally considered to be a
    flexible and easily formed business structure. However, partnerships may
    dissolve upon the expiration of a fixed term, completion of a specific project,
    the death or withdrawal of a partner, or by mutual agreement of the partners.

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