Section of the Partnership Act defines partnership as
"The relation between persons who have agreed to share the profits of a business carried on by all or am one of them acting for all"
According to Peterson and Plow man:
"A partnership is a legal form of contract between two or many competent persons to associate themselves in the common ownership and management of lawful business enterprise"
According to Kimbal:
"A partnership of firm as it is often called is that a group of men who have joined capital or services for the prosecution of some enterprise"
The partnership Act 1932 defines partnership as 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.
The persons who enter into partnership are individually called partner, collectively it is called a firm and the name under which they carry on their business is called the firm".
In short partnership mean when two or more than two persons join to start and run a business, it is called partnership. Partnership generally takes place among those persons who are either relative, friends or known to each other.
Features or Characteristics of Partnership:
Following are the main features or characteristics of partnership.
1. Agreement :
Agreement is necessary for partnership. Without agreement partnership cannot be formed. Partnership agreement may be written to settle the dispute.
2. Number of Partners:
In partnership there should be at least two partners and maximum twenty. It is worth while to mention here that in an ordinary business the partners must not exceed than twenty and in case of banking not more than ten.
3. Registration :
In partnership it is not necessary that a partnership firm may be registered. But it is necessary to point out here that in case of unregistered firm many problems can be created so to avoid these problems partnership firm may be registered.
4. Profit and Loss Distribution :
The first and foremost aim of partnership is to earn profit and such profit is distributed among the partners of the business according to their agreement. In the case of loss all the partners also share in loss.
5. Business :
The main and foremost object of the partnership is to carry on the business. Such business may be production or trading such business should be according to the laws and regulations of the state.
6. Unlimited Liability:
In partnership the liability of each partner is unlimited. In case of loss the private property of the partner is also used to pay the business debts.
Entity :
Until and unless partnership business is not registered it has no legal entity. Partnership is not independent from the partners. so partnership has no separate entity from its members.
8. Share in Capital:
According to the agreement in partner contributes his share. In partnership it is not necessary that all partners should contribute equally. In such type of business some persons provide only skill and ability to become a partner in business.
9. Management :
In partnership all the partners can participate in the activity or the business management sometimes only few persons are allowed to manage the business affairs.
10. Payment of Tax :
In partnership every partner pays the tax on his share of profit personally or individually.
11. Cooperation :
In partnership mutual cooperation and mutual confidence is a important factor. Without cooperation partnership cannot take place.
12. No Audit:
Until and unless partnership is not registered it has no legal entity: There is no restriction for the audit of accounts.
13. Utmost Good Faith :
In partnership the partners must be honest. fair and have utmost good faith in another for the successful partnership.
14. Partners or Agent :
In partnership cu cry partner stands as an agent. In the position of an agent one can do contract with other parties (firms) on behalf of the firm.
15. Transfer of Rights:
In partnership no one can transfer his share to other without the consent of all other partners.
16. Dissolution :
Partnership is a temporary form of business. It is dissolved if a partner leaves, dies or declared bankrupt or insane partners can also discover it by obtaining the degree from the court.
17. Partnership Act :
In Pakistan partnership business is running under the Partnership Act 1932 and all partnership businesses are running under this law.
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