The Indian partnership act 1932 defines a partnership as a relation between two or more persons who agree to share the profits of a business run by them all or by one or more persons acting for them all. It extends to the whole of India except Jammu and Kashmir. It shall come into force on the 1st day of October, 1932, except section 69 which shall come into force on the 1st day of October 1933.
The key features of the partnership are (subject to any variations set out in a partnership agreement between the partners) : share of risks and rewards- all individuals share the risks and rewards of the business, the share of profits- each partner is entitled to share the net profits of the business.
General duties of Partners
The partners shall run the business of the firm to the highest level of common advantage by being true to each other. They have to be accountable to one another and provide complete information of all the aspects of the firm, to any other partner or they, are legal representatives.
Elements of partnership
There are 5 essential elements that every partnership must contain they are-
1. Contract for partnership.
2. Association of two or more persons.
3. Carrying on of business.
5. Mutual agency.
Kinds of Partnership- the distinction between partnerships can be done on the basis of two criteria. They are-
1. With regard to the duration of the partnership- either partnership at will or partnership for a fixed duration.
2. With regards to the extent of the business carried by the partnership- either general partnership or particular partnership.
· Partnership at will- when forming a partnership if there is no clause about the expiration of such partnership, we call it a partnership at will.
· Partnership for a fixed-term- Now during the creation of a partnership, the partners may agree on the duration of this arrangement. This would mean the partnership was created for a fixed duration of time.
· Particular partnership- a partnership can be formed for carrying o continuous business, or it can be formed for one particular venture or undertaking. If the partnership is formed only to carry out one business venture or to complete one undertaking such a partnership is known as a particular partnership.
· General partnership- when the purpose of the formation of the partnership is to carry out the business, in general, it is said to be a general partnership.
The partnership is a very common type of business that is prevailing in the country. It has many advantages for the company. This act is a complete act as it covers all the aspects related to the partnership. In this context, we basically tell about the duties of partners, elements of the partnership, and the types of partners. Hope this blog will help you in understanding the Indian Partnership Act.