Partnership Firm

The law relating to partnership firm in India is prescribed in the Indian Partnership Act of 1932. This Act lays down the rights and duties of the partners between themselves and other legal relations between partners and third persons, which are incidental to the formation of a partnership. Thus, the Act establishes the position of a partner as well as a partnership firm vis-à-vis third parties, in legal and contractual relations arising out of and in the course of the business of a partnership firm.

Partnership

A partnership is a relationship between individuals who have agreed to share the profits of a business carried on by all or any one of them acting for all as stated in Section 4 of the Indian Partnership Act.

• A partnership must be a result of an agreement between two or more individuals.
• The agreement must be built to share the profits obtained from the business.
• The business must be run by all or any of them representing the rest.

An Agreement

An agreement from which a partnership relationship arises may be expressed or implied from the Partnership Act done by the partners. This agreement may be oral or in writing.

Sharing Profit of Business

There must be a business that exists. The existence of a company is crucial. The motive is the “acquisition of gains” that leads to the formation of a partnership. No partnership can exist without business and profit-sharing.

Types of Partnership

Partnership at will

A partnership by will is a partnership where no provision is made by contract between the partners for the duration or determination of their partnership.

Particular Partnership

A particular partnership is when a person becomes a partner with another individual in a particular business venture or project for its duration.