HERE'S HOW IT WORKS
“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”.
Persons who have entered into a partnership with one another to carry on a business to earn some profits are individually called “Partners“; collectively called a “Partnership Firm”; and the name under which their business is carried on is known as “Firm Name”
Thus as per the above definition, there must be 5 elements to constitute an entity as a partnership firm, namely:
(1) There must be a contract;
(2) Contract must be between two or more persons;
(3) Persons must be agreed to carry on a business;
(4) Business must be carried on with the object of sharing profits; and
(5) The business must be carried on by all or any of them acting for all.
Types of Partners
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Yes. A person may become a partner with another for a single adventure or undertaking.
Yes, a partnership firm may be formed without its registration with a maximum number of 20 persons. In case the number of partners exceeds 20, it has to be registered as a Company.
Yes, the firm and all the partners are liable for the wrongful act or fraud of a partner which causes loss or injury to any third parties.
Yes. The death of a partner automatically dissolves the partnership firm. It is however usual for the partnership deed to provide beforehand that the firm should continue in spite of the death, retirement, or insolvency of a partner.
When the partnership deed does not contain any provision for the duration of the partnership nor conditions for the termination of the partnership, it is a partnership at will.
Unlike unregistered partnership firms, one or more partners can file a case in court either against each other or against any third party, when any of their contracts are not honored.