Académique Documents
Professionnel Documents
Culture Documents
Submitted to:
Miss Anum Shaikh
Group “D”
S.# Name Roll#` Presentation Topic
1 Fida Hussain Mangi 131 Registration of Firms,
Advantages of Registration,
Effects of Non-Registration
2 Ghulam Abbas 132 Formation of Partnership,
Partnership Deed, Types of
Partnership
3 Hafeezullah 134 Law of Partnership, Test of
Partnership, Ideal Partnership
4 Ibrar Ahmed Qazi (Leader) 136 Reconstitution of Firm,
Dissolution of Firm, Grounds
of Dissolution
5 Iftikhar Ahmed 137 Rights of Partners, Duties of
Partners
6 Javed Iqbal Rajput 140 Kinds of Partners, Difference
Between Partnership and Co-
Ownership
Table of Contents
Law of Partnership...........................................................................................1
1. Characteristics of Partnership..........................................................................1
2. Advantages and Disadvantages of Partnership................................................1
3. Formation of Partnership.................................................................................1
3.1 Partnership deed...............................................................................................2
3.2 Rules in the absence of written agreement......................................................2
3.3 Firm’s name.....................................................................................................3
4. Registration of Partnership..............................................................................3
4.1 Preparation/submission of application.............................................................4
4.2 Certification.....................................................................................................4
4.3 Registration of change.....................................................................................4
4.4 Advantages of registration...............................................................................4
4.4.1 Advantages to firm……………………………………………………….......4
4.4.2 Advantages to partners……………………………………………………….4
4.4.3 Advantages to creditors……………………………………………………....5
5. Types of Partnership........................................................................................5
5.1 Partnership at will............................................................................................5
5.2 Particular partnership.......................................................................................5
5.3 Limited partnership..........................................................................................5
6. Kinds of Partners..............................................................................................6
6.1 Active partner...................................................................................................6
6.2 Sleeping partner...............................................................................................6
6.3 Nominal partner...............................................................................................6
6.4 Senior partner...................................................................................................6
6.5 Junior partner...................................................................................................6
6.6 Partner in profits only......................................................................................7
6.7 Secret partner...................................................................................................7
6.8 Minor partner...................................................................................................7
6.9 Incoming partner..............................................................................................7
6.10 Outgoing partner..............................................................................................7
7. Rights and Duties of Partners..........................................................................7
8. Reconstitution of Firm.....................................................................................8
8.1 Admission of new partner................................................................................8
8.2 Retirement of partner.......................................................................................8
8.3 Death of partner...............................................................................................9
8.4 Insolvency of partner.......................................................................................9
9. Dissolution of Firm..........................................................................................9
9.1 Dissolution Conditions.....................................................................................9
9.1.1 Dissolution without intervention of court........................................................9
9.1.2 Dissolution by court.........................................................................................10
References........................................................................................................11
LAW OF PARTNERSHIP
A partnership exists whenever two or more persons associate to conduct a non-corporate
business. Partnerships may operate under different degrees of formality, ranging from
informal, oral understandings to formal agreements filed with the secretary of the state in
which the partnership was formed.
According to Sec. (4) of Partnership Act-1932; “Partnership is the relation between
persons who have agreed to share the profits of a business carried on by all or any of them
acting for all”. Persons who have entered into partnership with one another called individually
“partners” and collectively “a firm” and the name under which their business is carried on is
called the “firm name”.
1. CHARACTERISTICS OF PARTNERSHIP
1. Ease of formation
2. Combined judgment and managerial skill
3. Large capital
4. Youngsters can enter in business
5. Mutual agency
6. Unlimited liability
7. Limited life
The major advantage of a partnership is its low cost and ease of formation. The
disadvantages are similar to those associated with proprietorships: (1) unlimited liability,
(2) limited life of the organization, (3) difficulty transferring ownership, and (4) difficulty
raising large amounts of capital. The tax treatment of a partnership is similar to that for
proprietorships, but this is often an advantage
3. FORMATION OF PARTNERSHIP
Notes: A Partnership deed can be obtained in the form of Judicial papers that cover all the
points mentioned above. This in turn can be signed and submitted to the registrar as
mentioned.
The following rules will apply in the absence of a written agreement among the partners:
The partners can choose any name for the firm according to the following rules:
1. The name must not be identical or similar to the name of an existing firm
2. A firm name shall not contain any of the following words, namely:
“Crown”, “Emperor”, “Empress”, “Empire”, “Imperial”, “King”, “Queen”,
“Royal”, “Jinnah”, “Quaid-e-Azam”, “Dominion”, or words expressing or
implying the sanction, approval or patronage of the Crown or of the Quaid-e-
Azam or the “Federal” Government or any Provincial Government, except when
the Provincial Government signifies its consent to the use of such words as part of
the firm name by order in writing.
3. It must not contain the name of “United Nations” or abbreviations of its subsidiary
body without the sanction of the Secretary General of UNO
4. It must not contain the name of “World Health Organization” or its abbreviations
without the sanction of the Director General of WHO
5. It must contain any word, which may be declared by the Provincial Government,
as undesirable
4. REGISTRATION OF PARTNERSHIP
4.2 Certification:
Once the registrar is satisfied with the application, he registers the firm and enters its
name in the Register of Firms. He then issues a certificate of registration is issued to the
partners. This completes the procedure of registration.
Where any change in the constitution of the firm occurs, during the continuance of
partnership, such change shall also be registered with the register of firms. Such change
may be; any change among the partners due to admission, retirement, death, insolvency,
expulsion minor or dissolution.
1. Registered firm can bring a suit against third party for enforcement of rights
arising from a contract
2. Registered firm can claim set-off or adjustment of amount receivable or payable
from third party
3. Registration enhances the goodwill of the firm
4. Registered firm contracts large capital resources
1. Creditors can definitely know from the records of registrar the persons who are
partners
2. Creditors can claim their due from all the partners
5. TYPES OF PARTNERSHIP
The essence of a “partnership at-will” is that the partners do not limit the duration of their
partnership, and are free to break their relationship at any time they see fit. It is a
partnership for indefinite period. The partnership may be dissolved at any point as long as
the partner gives notice to all the other partners. An ordinary partnership becomes a
partnership at-will under the following circumstances:
In this kind of partnership one or more partners have limited liability and at least on of the
partners has unlimited liability. The liability of the limited partner is limited to the extent
of his investment in the business.
6. KINDS OF PARTNERS
A partner who takes an active part in the management of firm is called active partner. He
takes much interest in the affairs of firm. Such a partner must give public notice of his
retirement from the firm in order to free himself from liability. He is also called working
partner.
One who does not take an active part in the management of the firm is called sleeping or
dormant partner. He is also liable to the creditors of the firm like other partners. He is not
required to give notice to general public about his retirement from the firm because he is
not known to the general public.
One who leads his name and reputation to firm is called nominal partner. He does not
invest in business. He does not take part in the management like other partners. He does
not get share in profits. But he is regarded as partner in the eye of law. He is liable to
outsiders for the debts of the firm.
A partner who has a more investment in the firm and receives more profit is called senior
partner. He plays a major role in the management of the business due to experience, age,
capability and other skills.
A junior partner is opposite of a senior partner. Usually, he is a young man who has
recently become a partner of the firm. He has a small investment in the business. Due to
small investment and less experience, he receives a nominal share in profits. He has no
major role in decision making.
He is a partner whose membership is kept secret from outsiders. He takes an active part in
management of the firm. He is liable for debts of the firm like other partners.
A minor partner is a person who is under 18 years of age. The person who wants to enter
into partnership must be competent to contract. As a minor is not competent to contract,
so he cannot become a partner. But with the consent of all the partners he may be
admitted to the benefits of partnership by an agreement with his guardian.
A partner who joins a running business as a new comer. This partner, in fact, pays the
premium of the goodwill of the firm which has been established by other partners. The
incoming partner, after his joining, assumes all the liabilities of the firm.
According to partnership deed, a partner can leave the partnership and after him,
remaining partners could keep the business continue. Such partner would assume the
responsibility of all the loans which were acquired before his quitting from the business.
It is therefore, necessary that such partner should inform the concerned people about his
leaving the firm.
Rights of Partner(s):
Duties of Partner(s):
8. RECONSTITUTION OF FIRM
If a partner of a firm dies, his successors may or may not like to remain as partners of the
firm. If any one agrees to remain partner, at least a new name must be recorded in the
partnership. Therefore, dead partner’s account should be closed from the partnership
business. It means that there is change in membership or dissolution of the existing
membership. Again, dissolution of a partnership in these cases doesn’t mean that business
should be discontinued or liquidated, but after computing the payable amount (balance) of
dead partner and making payment in full or partial to the dead partner’s successors, the
existing partners with or without the entry of new partner are allowed to continue their
business after amending the necessary clauses of the partnership agreement.
9. DISSOLUTION OF FIRM
The dissolution of a partnership between all the partners of a firm is called the dissolution
of the firm, in such case, the firm is closed down and its affairs are wound up. The assets
are realized and the liabilities are paid off.
1. Dissolution by mutual consent: If all the partners have agreed to dissolve the
business
2. Compulsory dissolution: If any one or all partners become insolvent or the firm
is becoming unlawful due to the happening of any such event
3. Dissolution on the happening of certain contingencies:
i) If partnership was formed to undertake a specific project and that project has
been completed
ii) If partnership was constituted for a specific period and that period has expired
iii) By the death of partner(s)
9.1.2 Dissolution by order of the court:
A partnership may also be dissolved by court on the filling of a suit by a partner on any of
the following grounds:
When the firm is dissolved; its assets are disposed off by selling or transferring to
partner(s) and the amount so realized is utilized in paying-off first the liabilities of the
firm; next to partners as refund of loan (if any), and lastly; payment of partners capital
along with profit or loss of the business in the same proportion in which they had been
sharing profit during the life of the firm.
REFERENCES