Following are the main features of
partnership for of organization.
1. Plurality of
persons: To
form a partnership firm, there should be at least two persons. The maximum
limit on the number of persons is ten for banking business and twenty for other
types of business.
2. Contractual
relationship: Partnership
is created by an agreement between persons called 'partners'. In other words, a
person can become a partner only on the basis of a contract. This contract
could be oral, written or implied.
3. Profit sharing: There must be an
agreement among the partners to share the profits and losses of the business of
the partnership firm. This is one of the basic elements of partnership. If two
or more persons jointly own some property and share its income, it is not
regarded as partnership.
4. Existence of
business: The
purpose of the agreement among the partners is to do some lawful business and
share profits. If the purpose is something other than business, it should not
be treated as partnership. For example, if the purpose is to carry some
charitable work, it will not be treated as partnership.
5. Principal-agent
relationship: The
business of the firm may be carried on by all or one or more partners acting
for all the partners. Every partner is entitled to take part in the operations
of the firm. In dealing with other parties, each partner is entitled to
represent the firm and other partners in respect of the business of the firm.
All partners are bound by his acts done in the ordinary course of business and
in firm's name. In this sense a partner is agent of the firm and the other
partners.
6. Unlimited
liability: In
respect of business debts, each partner has unlimited liability. This means
that if the assets of the firms are not sufficient to meet the obligations of
the firm, the partners have to pay from their private assets. The creditors can
even realise the whole of their dues from one of the partners. Thus, all the
partners are jointly and severally liable for all business debts and
obligations.
7. Good faith and
honesty: A partnership
agreement rests on good faith among the partners. The partners must be honest
to each other and trust each other. They must disclose every information about
the business and present true accounts to one another.
8. Restriction on
transfer of share: A
partner cannot transfer his share to an outsider without the consent of all the
other partners.
