Prior to the year 1932, there was no arrangement for the registration of firms in India. But after the enforcement of the Partnership Act, 1932, provisions for registration of firms were made. But for partnership firms, registration was made voluntary and not compulsory, or registration of the firm is dependent on the will of the partners. Nonregistration of the firm creates a number of difficulties. Therefore registration of the firm is very beneficial.Read More »Registration of Firms
A partner has unlimited personal liability in a partnership firm. The liabilities of partners are unlimited in all firm contracts. They are jointly and severally liable for all torts committed by one of the partners or by a firm employee within the scope of the partnership’s business.Read More »Duties, Obligations and Liabilities of Partners
A partnership is a voluntary organization of two or more persons who agree to earn profits from a lawful business and share it among themselves. The persons who participate in this business are individually called ‘Partners’ and cumulatively called a ‘Firm’. The name in which the business is carried on is called ‘the name of the firm’.
The partner who has invested more in partnership business and directly involves in business activities is called an active partner. The partners who have invested money but involve in business activity is called sleeping partner. The partner who has invested money but nominated as a partner is called a nominal partner. The partner who is retired from the business but investment is not written is called quasi-partner.
A partnership firm is different from a Sole Proprietorship in terms of the rights of a partner.
Introduction and Meaning
Partnership is the mutual relationship between two or more persons, who make a contract to share profits and losses among themselves from the exercises of a specific business. In other words, when two or more persons agree to carry on a business for mutual profits, it is said that they have formed a partnership.
The rights of a partner in a partnership firm are different from the counterpart of a sole proprietorship firm.