Definition of partnership

1. Partnership is the relation between persons

2. who have agreed
3. to share the profits
4. of a business
5. carried on by all or any one of them acting for all.
6. The No. of partners in a firm shall not exceed 20
7. partnership having more than 20 persons is illegal
8. . When there is partnership between two firms, all the
partners of each firm will be taken into account. If the
partnership is between the karta or member of Hindu
undivided family the members of the joint Hindu family will
not be taken into account

Advantages
Advantages of partnership firms:
Partnerships are not difficult to form.
All partners are owners and therefore there is a
share in the profits.
All partners have the right and freedom to manage
the business.
There are few legal restrictions.
The organization is easy to dissolve.
Partners are taxed individually and not as a business.
Essentials elaborated
A.
1. Agreement
2. competent to contract.
3. the age of majority
4. sound mind
5. and is not disqualified from contracting by any law to which he is subject
B
1. The following can enter into a partnership
2. INDIVIDUAL
3. FIRM
4. HINDU UNDIVIDED FAMILY
5. COMPANY
6. TRUSTEES

Need of partnership
A partnership is usually formed to combine
capital, labour and varied specialised skill or
abilities.
A person may posses exceptional business ability
but no capital so he can have a financing partner.
A financier may need a managerial expert as well
as a technical expert and all of them may
combine to set up a business with common
ownership and management under a voluntary
agreement such a business taking the name of
partnership.
Firm: owners of the partnership business are
individually called partners and collectively
called a firm.
The firm name : the name under which the
business is carried on is known as firm name.
The firm name has no separate legal status
like the name of a company and it cannot
create any individuality or distinct legal
existence.
However it has a goodwill and it is usually
continued for a long time even if partners may
have changed
Features of partnership
1) Presence of business : a partnership is a form
of business unit (industry or commerce).
2) Agreement: it is created by mutual consent
and voluntary agreement .there must be an oral
or written agreement to form a
partnership(partnership in a joint hindu family
firm determined by birth and status.
3) sharing of profit:(sharing of profit merely point
out the probability of partnership and it cannot
act as the real test of partnership.
4)Dual role of principal and agent:
5) team spirit
6) minimum and maximum member(2 &20)
7)unlimited liability( he is jointly and also
individually liable for the payment of all debts of
the firm up to the last rupee in his pocket.
8)No free transfer of share
9)No legal status.
Disadvantage

Limitation on capital and organizing power
Absence of separate legal status and stable life
Dangers of unlimited liability
Non transferable partnership share
No public confidence