Introduction To Business Lecture 4

PARTNERSHIP LECTURE # 4

Outline        

Introduction to Partnership Elements of partnership Definitions Legal Essentials Features Merits Demerits Types of partners

INTRODUCTION Partnership is the kind of business organization in which two or more persons join their resources and skills to operate a business and earn profits from it.  After the sole proprietorship the next development in business organization was the formation of partnerships 

ELEMENTS OF PARTNERSHIP 

  

Association of at least two or more persons. Contractual relationship Earning of profit Mutual agency

DEFINITION 

Partnership is form of business ownership in which the company is operated by the two or more people who are co owners by the voluntary legal agreement.



Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one acting for all (Partnership act 1932)

LEGAL ESSENTIALS     

Agreement (written or oral) Agreement to share Profits Agency Relationship Unlimited Liability Maximum Number of Partners Minimum 2 members  Maximum 20 members  For banking firm 10 members 

FEATURES 1. 2. 3. 4. 5. 6. 7. 8.

Formation Minimum and maximum number of partners Equal Contribution or Capital_ not necessary Equal share in profits_ not necessary Registration Transfer of Interest Management Agency Relationship Contd……..

Contd……..

2. 3. 4. 5.

Duration Implied authority Admission of a new partner Ease of dissolution

MERITS M ore public confidence E ase to form and to dissolve R I T S

expansion of business egistation not compulsory Reduced audit expense mmediate decisions ransfer of loss ecracy Starting cost low

F

lexibility

G

reat Manageability

L

ack of strict laws Larger Capital

DEMERITS D ivided control E mploying lower quality workers M ore chances of disputes E xpansion problem R isk of loss L ack of public confidence I nadequate capital Limited life T ransfer of share S low decision making U nlimited liability

TYPES OF PARTNERS



General Partner  Active

Partner  Sleeping Partner  

Special Partners Others

Contd……..

Contd…….. 

Others  Secret

Partner  Nominal Partner  Minor Partner  Partner at will  Partners in Profit only  Partner by Estoppel