Partnership: 

A partnership was born to eliminate the defects/disadvantages of a sole trader. It works with huge investment. 

(1) Haney has given a suitable definition of partnership in simple words. According to him, “Partnership is the relationship between persons who agree to carry on a business in common, with a view to private gain.” 

(2) According to the American Partnership Act – 

“Partnership is the association of two or more persons who carry on a business for profits as co-owners.” 

(3) Indian Partnership Act, 1933, Section 4 – 

“The relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all.” In the end, we can say that partnership is an association of two or more persons, to carry on a business.

The partners collectively provide capital, manage the business and equally share the profit or loss of the business. The persons who enter into partnership for mutual sharing of profits are individually called partners and collectively called partnership firm and the name under which they run their business is known as ‘Name of the Firm.’ Features of Partnership.

Following are the features of partnership: 

1. Formation – 

The partnership is formed under Indian Partnership Act of 1932, with a lawful contractual agreement. It includes the relation between the partners, their share of the ratio of profit and loss, etc. The partnership is formed for attaining profit and lawful activities, not for charitable service or unlawful business activities. 

2. Unlimited liability – 

The partners in this form of business are liable to repay the debts even from their personal resources in case the firm is not efficient to meet its debts, which creates a risk to their personal property. 

3. Decision Making and Control – 

The activities of the partnership firm are controlled and managed through the joint effort of all partners. Decisions are generally taken by mutual consent. 

4. Continuity – 

These is a lack of continuity in a partnership firm because if a partner dies, becomes lunatic, retires, then partnership dissolves. After that, the remaining partners can form a new partnership firm. 

5. Number of Members – 

Partnership should at least have 2 members, for Banking, the maximum partners should be 10 and for other businesses, it should be 20. 

6. Mutual agency – 

Partnership can be run either by all its partners or by one single partner who can run all the business. Therefore, every partner is an agent as well as the owner.