Unit 1 General nature of partnership

• Partnership


  The relation between persons who have agreed to carry on a business for profit
• Elements of Partnership

  • Association of persons
  • Agreement to share profits
  • Existence of business
  • Business carried on acting for all
• Persons who have entered into partnership are called partners
• Agreement in Partnership

  • Must be express or implied
  • Can be written or oral
  • Binding contract between partners
• Partner is the principal as well as the agent of all other partners
• True test of partnership

  Existence of agreement between all persons concerned<|>Sharing of profits of business carried on by all
• Kinds of Partnership

  • General Partnership
  • Particular Partnership
  • Partnership at will
  • Partnership for fixed time
• General Partnership

  • No fixed period
• Particular Partnership

  • Created for a specific undertaking or adventure
• Types of Partners

  • Active/Ostensible Partner
  • Dormant Partner
  • Nominal Partner
  • Partner in profits only
• Active/Ostensible Partner


  Participates actively in the conduct of the partnership business
• Dormant Partner


  Does not actively take part in the conduct of the partnership business
• Nominal Partner


  Leads his name to the firm without having any real interest in the business
• Nominal partners are not entitled to share profits
• Nominal partners are not liable to third parties for all acts of the business
• Partner in profits only

  Entitled to share profits only, not liable for losses
• Partner in profits only is not liable to third parties for all acts of the business
• Admission of a new partner requires the consent of all existing partners
• Retirement of a partner does not affect the liability of the firm for acts done before retirement
• A person representing himself as a partner is liable like a partner in the firm