Commercial Applications
Answer
Three features of partnership are:
Two or More Persons — Partnership is an association of two or more persons. There must be at least two persons to form a partnership. According to Section 464 of the Companies Act 2013, the maximum number of partners has currently been set at 50 partners per firm.
Agreement — Partnership is the outcome of an agreement between two or more persons. The relation of partnership arises from the formation of a contract and not from status or birth. The agreement may be oral or in writing.
Sharing of Profits — The agreement between the partners must be to share the profits of business. There can be no partnership without the intention of mutual gain. The profits must be distributed among the partners in an agreed ratio. Similarly, losses should also be shared among the partners.
Related Questions
A client sues a partnership firm for not delivering goods on time. The court orders all partners to pay compensation using their personal assets. What feature of partnership leads to this situation?
- Unlimited liability
- Mutual agency
- Sharing of profits and losses
- Restriction on transfer of interest
Define partnership.
A partnership firm operating a travel agency is facing legal issues because one partner took a loan in the firm's name without informing the other partners. How does the principle of mutual agency apply to this situation?
What is implied agency in partnership?