Definition and types of partnership
Definition (Article#4)
"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."
Who is Partner?
Persons who have entered into partnership with one another are individually called 'partners'. A partner has the legal status of a person.
What is Firm?
Persons who have entered into partnership with one another are collectively called 'firm'. As far as the legal status of a firm is concerned, it is neither a person nor a legal entity. It has no existence apart from its members. A firm carries a business under some name, it is called 'firm name'.
Types of Partnership
Types of partnership are often classified on the basis of time duration, purpose and number of persons as well. As far as the reasonable duration of a partnership is concerned, the partners have the original right to mention it in the agreement otherwise the Act has discussed two aspects;
A. Partnership at Will;-
Article#7 of the Act states that; "Where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership the partnership is partnership at will."
B. Particular Partnership;-
The generality of the duration of partnership has been specified to accomplishment of some task in the Article#8 of the Act as; "A person may become a partner with another person in particular adventures or undertakings."
C. Limited Partnership;-
A partnership is usually formed with the joining of at least two partners in a business and are liable to the extent of their respective investments. In Limited Partnership, there is a limited partner who may have access to all sort of transactions taking place in the partnership but neither receives dividends nor accounts for complete liability. This kind is also referred as 'Limited Liability Partnership'.
