Vous êtes sur la page 1sur 4

Report of Business law

Mode of determining existence of Partnership
Submitted to:
Ma`am Naila Khilji
Submitted by:
Kashif Sultan
Roll#: 58
5th semester Eve (BBA hons)


B.Z.U Multan.
A partnership is an arrangement in which parties agree to co-operate to advance their mutual

According to Sec 4 of the Partnership Act 1932, Partnership is the relation between persons who
have agreed to share profits of a business carried on by all or any of them acting for all

Two types:
1. General partnership: All the partner share the management and profit equally.
Each partner has limited liability

2. Limited partnership: It has two types of partner

(a)One or more general partners- who have unlimited liability

(b) One or more limited partners- Whose liability is limited to the amount of their investment



sole participation in profits and losses,

use of owners ability,

ease of starting,

tax breaks,

secrecy and

ease of dissolving

Unlimited Liability.

Difficulty in raising capital.

Limitations in managerial ability.

Lack of stability.

Demands on time.

Difficulty in hiring and keeping high-achievement employees.

Below are some of the written partnership agreement

What is the name of the partnership?

. What is the purpose of the partnership?

. What is the duration of the partnership?

. Location of the business

What is each partner's role?

. What banking arrangements will be made for the partnership?

. Which partners will have check signing privileges?

. How will the books be kept?

. Method for dissolving the partnership

. When can the partnership be dissolved



. More capital . Unlimited liabilities

. Combined managerial skills . Problem of management

. Easy to start . Lack of secrecy

. Tax advantages . Instability


The relation of partnership arises from contract and not from status; and, in particular, the members
of a Hindu undivided family carrying on a family business as such, or a Burmese Buddhist husband
and wife carrying on business as such are not partners in such business.
Mode of determining existence of partnership (Test of partnership

In order to determine the existence of partnership, the following must be proved:

There must be an agreement among the persons to be held as partners

The agreement must be for doing some business

The agreement must be to share the profits of a business

There must be a relationship of principal and agent among the partners

There must be an agreement to carry on the business by all or any of them acting for all

Or also

Indian Partnership Act, 1932

. Mode of determining existence of partnership

In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in
a firm, regard shall be had to the real relation between the parties, as shown by allrelevant facts taken
Explanation 1 : The sharing of profits or of gross returns arising from property by persons holding a joint
or common interest in that property does not of itself make such persons partners.

Explanation 2 : The receipt by a person of a share of the profits of a business, or of a payment contingent
upon the earning of profits or varying with the profits earned by a business, does not of itself make him a
partner with the persons carrying on the business;

and in particular, the receipt of such share or payment-

a. by a lender of money to persons engaged or about to engage in any business,

b. by a servant or agent as remuneration,
c. by the widow or child of a deceased partner, as annuity, or
d. by a previous owner or part owner of the business, as consideration for the sale of the good
will or share thereof,

does not of itself make the receiver a partner with the persons carrying on the business.