Question

State any four features of a Partnership.

Answer 1

Features of a Partnership are as follows:

1. Two or more persons: To form a partnership, there must be a minimum of two persons. The maximum number of persons in a partnership is 10 for a banking firm and 20 for any other business.

2. Agreement between the partners: A Partnership is created by an agreement between the partners. It is neither created by the operation of law nor by status. The agreement may be written or oral. It forms the basis of the economic relationship between the partners.

3. Sharing of Profits: The agreement should be such so as to earn and share profits of the business. Charity is not a type of partnership. The profit sharing ratio is determined by the partners by a mutual agreement between them. In the absence of such agreement, the profits are shared equally among them.

4. Common Goal: The common goal of all partners is to carry out a legal business. A joint ownership of property cannot be termed as a partnership. The firm's business can be carried out by all the partners or by any one of them acting for all. Partnership is based on the mutual agency relationship; i.e, the partner acts as the agent as well as the principal of the firm.