Business Law - General Nature of a Partnership

Description

Chapter 3: The Indian Partnership Act, 1932

UNIT -1: GENERAL NATURE OF PARTNERSHIP

INTRODUCTION

‘Partnership’ is the relation between persons who have agreed to share the profits 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 ‘partners’ and collectively ‘a firm’, and the name under which their business is carried on is called the ‘firm name’.

After studying this unit, you would be able to understand-

1. Understand the concept of partnerships and be clear about its essentials.

2. Try to understand the ‘principal - agent relationship’ among the partners.

3. Note the points of difference between partnership and other various forms of organization.

SUMMARY

It is not quite easy to define the term ‘Partnership’. The definition given by Section 4 of the Act brings out very clearly the fundamental principle that each partner, when carrying on the business of the firm, is an agent as well as principal, and is probably the most business like definition of the term. The definition contains three elements which must be present before a group of persons can be held to be partners, namely; (a) agreement among all the partners; (b) agreement to share the profits of the business; (c) the business must be carried on by all or any of them, acting for all. These three elements may appear to overlap, but they are nevertheless distinct.

The element of agreement in partnership distinguishes it from various other relations which arise by operation of law and not from agreement, such as, joint-owners, Hindu Undivided Family, etc.

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