Partnership Fundamentals: Basic Concepts
- Partnership is relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all.
- Features of partnership are: it is an association of two or more persons, must come into existence by agreement, must come into existence for carrying on a business with the intention to earn profits, can be formed only for the lawful business, etc.
- Rights of partners include taking part in the management of the business, to inspect books of account and have a copy of the same, to retire after serving proper notice, etc.
- Duties of partner are: they are bound to attend diligently to his duties in the conduct of business, Liable to account for and pay to the firm any private profits, not to act outside the parameters of his authority, etc.
- Partnership Deed is a written agreement/contract between/among the partners. In absence of deed provisions of Partnership Act 1932 will apply.
- A partnership is not a separate legal entity and is merely collection of partners.
- A firm cannot hold property in its own name, person cannot sue and be sued in its own name, assets of the firm are joint property of the partners, all partners are jointly and severally liable for all the business obligations of the firm Limited Liability Partnership is a body corporate’ formed and incorporated under Limited Liability Partnership (LLP) Act, 2008 and is a legal entity separate from its partners and has perpetual succession [Section 3(1)].
- LLP comes into existence when a minimum number of persons enter into an agreement; agreement is filed with the Registrar of Companies.
The right of a partner isMarks:1
To inspect the books of account and have a copy of the same.
Explanation:To inspect the books of a account and have a copy of the same is one of the right of a partner.
It is the duty of the partner toMarks:1
devote time and attention to the business of the partnership.
Explanation:To devote time and attention to the business of the partnership is one of the duty of a partner. he may or may not allow the admission of a new partner.
Partnership deed helpsMarks:1
to avoid disputes in future.
Partnership deed is not compulsory by law but in case of dispute/ misunderstanding it can be referred to.
Partnership is defined under partnership act:Marks:1
Explanation:Partnership is defined under Indian Partnership Act,1932.
Minimum number of individuals in Partnership business-Marks:1
In order to from Partnership business, there should be at least two or more people.