PARTNERSHIP RELATED MATTERS
Partnership results from a contract and is governed by the Partnership Act 1932. The partnership is also governed by the general provision of the Indian Contract Act on such matters where the Partnership Act is silent. It is expressly mentioned that the provision of India Contract Act which is not repealed will be applicable on Partnership until and unless such provision is in contrary to any provision of Partnership Act, 1932. The rules of contract regarding the capacity to contract, offer, acceptance etc will also be applicable to the partnership. But the rules regarding the status of minor will be governed by the Partnership Act, 1932 since Section 30 of the Act talks about the position of the minor.
Nature of Business
It is a business organization where two or more persons agreed to join together to carry out the business for the purpose of earning the profits. It is an extension of a sole proprietorship. It is better than sole proprietorship because in sole proprietorship the business is carried out by the individual with limited capital and limited skill. Due to the limited resources of a single individual carrying a sole proprietorship, a larger business requiring more resources and investment than available to the sole proprietor cannot be thought of such business. On the other hand in partnership, a number of partners join together with their capital to form an agreement and carry out a business jointly.
Meaning
According to Section 4 of the Partnership Act,1932
“Partnership is the 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”.
Essential requirements of a partnership
-> There must exist an agreement between the partners.
-> The motive is to earn the profit and share between the partners.
-> The agreement must be to carry out the business jointly or by any of them acting on the behalf of all.