Partnership Essay

1027 WordsJun 29, 20135 Pages
Partnership In a contract of partnership, two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profit among themselves. Two or more persons may also form a partnership for the exercise of a profession An association of two or more persons to carry on, as co-owners, a business for profit (Uniform Partnership Act, Section 6). Partnerships resemble sole proprietorships, except that there are two or more owners of the business. Each owner is called a partner. General partner is liable to the extent of his separate property after all the assets of the partnership are exhausted. Limited partner is the one who is liable only to the extent of his capital contribution. Partnerships are generally associated with the practice of law, public accounting, medicine and other professions. Partnerships of this nature are called general professional partnerships. On the other hand, service industries, retail trade, wholesale and manufacturing enterprises may also be organized as partnerships. A partnership agreement may be oral or written. However, to avoid misunderstandings, the partnership agreement should be in writing.The agreement should identify the partners respective business-related duties and responsibilities. There should be more than one person to form a partnership. But there is restriction for the maximum number of partners. In case of ordinary business, the partners must not exceed 20 and in case of banking must not exceed 10 (before nationalization). In limited partnership the number of member are 2 to 50 are required. The basic motive of the formation of partnership is to earn profit. This profit is distributed among the partners according to agreed proportion. If there is loss it will be sustained by all partners except the minor. It has no separate entity apart from its members. It

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