Discuss any four limitations of partnership.
Discuss any four limitations of partnership.
Limitations of Partnership are explained below :
(a) Unlimited liability - In case of the failure of the business, the personal assets of the partners can be used to discharge the firm's obligations. So the partners are jointly and individually liable bearing unlimited liability.
(b) Conflicts among partners - Difference in opinions on some issues may lead to disputes between partners, further the decisions taken by one partner are binding on other partners. Thus the unwise decision by someone may result in financial ruin for all others.
(c) Lack of continuity - Partnership comes to an end with the death, retirement, insovencey or lunacy of any partner. This may result in a lack of continuity of business :
(d) Limited resources - As there is a restriction on a maximum number of partners, so the partnership firm has to conduct its business with the limited capital contributed by the partners. As a result partnership firms face problems in expansion beyond a certain size.
Limitations of Partnership are explained below :
(a) Unlimited liability - In case of the failure of the business, the personal assets of the partners can be used to discharge the firm's obligations. So the partners are jointly and individually liable bearing unlimited liability.
(b) Conflicts among partners - Difference in opinions on some issues may lead to disputes between partners, further the decisions taken by one partner are binding on other partners. Thus the unwise decision by someone may result in financial ruin for all others.
(c) Lack of continuity - Partnership comes to an end with the death, retirement, insovencey or lunacy of any partner. This may result in a lack of continuity of business :
(d) Limited resources - As there is a restriction on a maximum number of partners, so the partnership firm has to conduct its business with the limited capital contributed by the partners. As a result partnership firms face problems in expansion beyond a certain size.
