Partnership
Q : Define Partnership ?
Ans : A partnership is defined as the relationship between persons who have agreed to share profits of a business carried on by all, or by any of them acting for all. For example, if three person forms a partnership, all three can carry on the business or only one can carry business on behalf of all but profits will between shared between all three.
Note : The Act is salient on the maximum number of partners in a partnership firm. It is only Section 11 of the Companies Act , 1956 that imposes a limit at 20 in case of bankingbusiness and 20 in case of any other business.
Q: What are the Essentials Of Partnership?
Ans : The essentials of partnership are as follows :-
(i) Partnership is an association of two or more persons.
(ii) Partnership must be the result of mutual agency between two or more persons.
(iii) The agreement must be to carry on some business.
(iv) The agreement must be share profits of the business.
(v) Business must be carried on by all or any of them acting for all.
Q: Differentiate Partnership From Company.
Ans:
| | Partnership | Company |
| 1. Legal status 2. Mutual Agency 3. Liability of Members | A partnership firm has no existence apart from its members. Partnership is founded on the idea of mutual agency. Every partner is an agent of the rest of the partner. Liability of a partner is unlimited i.e., even his own personal assets are liable for debts of the firm. | A company is a separate legal entity distinct from its members. A member of a company is not an agent of the other members. Liability of member or shareholder of limited company is limited to the extent of the amount remaining unpaid on shares held by him or the amount of guarantee as mentioned in the Memorandum of Association of the company. |
| 4. Transfer of Interest 5.Duration Of Existence 6. Minimum Membership 7. Maximum Membership 8. Audit | A partner cannot transfer his interest without the consent of all other partners. Unless there is a contract to the contrary, death, retirement or insolvency of a partner results in the dissolution of the firm.. The minimum number of person required to form a partnership is 2. A partnership cannot be formed with persons exceeding 20. The number is limited to 20 in case of banking business. The audit of the accounts of a firm is not compulsory. | A shareholder on the other hand can freely transfer his share.. A company enjoys a perpetual succession. Death or retirement or insolvency of a member does not affect the existence og the company. The minimum number required to form a company is 2 in the case of private companies and 7 in case of public companies. There is no limit to the maximum number of members in case of a public company. However a private cannot have more than 50 members. The audit of the accounts of a company is obligatory, i.e. a legal necessity. |
| | | |
Q: What is the difference between Partnership and Joint Hindu Family Business?
Ans:
| | Partnership | Joint Hindu Family |
| 1. Creation 2. Admission 3. Female Members | Partnership is essentially the result of an agreement between the parties. In a partnership, new partner can be admitted only with the consent of all the existing partners. A female can join partnership business as a full-fledged partner.. | A Joint Hindu Family is the result of status. In Joint Hindu Family business a person becomes a member merely by his birth. A female member cannot become a member of a Joint Hindu Family business. |
| 4. Minor Members 5.Death of a member 7. Liability | A minor cannot be member of a firm except that he may be admitted to the benefits of an already existing partnership firm. Death of a partner generally dissolves the firm... Every partner is liable to an unlimited extent. | Minors, in case of Joint Hindu Family, are members of the family from the date of their birth. The death of a member of a Joint Hindu Family leaves the firm unaffected. Only Karta is liable unlimitedly, the liability of other members is limited to the extent of their share in profit.. |
