Partnership - A partnership is not created by registration, it, is not created by status. every joint venture need not necessarily be a partnership. In a partnership, the partners are self employed. the partners participate in the business and not with the business. Ultimately, they may or may not make a profit, But when they agree to, carry on business, their motive should be to make profit.
Special Features of Partnership -
- Number of Partners- There are two or more persons in the partnership. It is an association, Individual can not create any partnership.
- Agreement - It is very essential for Partnership that the persons should bound with the agreement. The agreement may be oral, written or implied.
- Profit sharing- The Partners agree to share the profit of the business which they earned from the particular business.
- Liability - All the partners are liable or responsible for all the activities of business firm. weather business is earning profit or loss.
- The business is carried, on by all- The persons are called individually as "partner". they are collectively "a firm". the name under which the business is carried on is called the "firm name".
- Mutual trust- Mutual trust and understanding play important role in partnership. Each partner work in the business to get profit of all. if trust is broken and partners work at cross purposes, the firm will get crushed under its own weight.
- Registration - According to the act registration is not compulsory for a Partnership. However, if the firm is not registered, some benefits cannot be obtained. If a firm is not registered - The firm cannot file a suit against a partner or third party to recover its dues. and a partner cannot file a suit against the other partners.
Rights of partners- There are some rights of partners in partnership of business.
1. Right to share profits - The partners are entitled to share the profits equally.
2. Right to indemnity - A partner shall indemnify the firm for any loss caused to the firm by his willful neglect in the conduct of the business of the firm.
3. Right to remuneration- A partner is not entitled to receive remuneration for taking part in the conduct of the business.
4. Right to consulted - according to the section partners shall have right to express an opinion before deciding of matter. Partners have rights for resolving disputes relating to the business between the partners by the majority.
5. Right to interest - A partner who is entitled for interest on the capital subscribed by him shall be paid only out of profits.
6. Right to consent- Every partner has to right that no change may be made in the nature of the business without the consent of all the partners.
7. Right to inspect and copy of book - Every partner has a right to have access to and to and to inspect and copy any of the books of the firm.
Duties of partners - There are some general duties of partners in partnership.
- Duty to render true accounts. - According to the section 9 it is the duty of every partner in partnership that to render true accounts and full information of all things affecting the firm, to any partner or his legal representative.
- Duty to good faith. - It is a duty of partners that to be just and faithful to each other.
- Duty to indemnify - Every partner shall indemnify the firm for any toss caused to it by his fraud in the conduct of the business of the firm.
- Duty to diligent - according to section 12(b) a partners is bound to diligently attend his duties.
- Duty not to compete with partner - If the partner makes a profit by engaging in a business which is similar to or competing with the firm, then the partner should account for such profits.
Please do not enter any spam link in the comment box.