Question

Explain any five features of partnership

Answer 1

Answer:

Features and Characteristics of Partnership Firm: Lawful Business, Agreement, Profit Sharing, Joint Ownership and a Few Others

Features of Partnership Firm: 10 Important Features

The principal features of partnership firm may be listed as:

1. Two or More Persons:

At least two persons must pool resources to start a partnership firm. The Partnership Act, 1932 does not specify any maximum limit on the number of partners. However, the Companies Act, 1956 lays down that any partnership or association of more than 10 persons in case of banking business and 20 persons in other types of business is illegal unless registered as a joint stock company.

2. Agreement:

A partnership comes into being through an agreement be­tween persons who are competent to enter into a contract (e.g. Minors, lunatics, insolvents etc. not eligible). The agreement may be oral, written or implied. It is, however, to put everything in black and white and clear the fog surrounding all knotty issues.

ADVERTISEMENTS:

 

3. Lawful Business:

The partners can take up only legally blessed activi­ties. Any illegal activity carried out by partners does not enjoy the legal sanction.

4. Registration:

Under the Act, registration of a firm is not compulsory. (In most states in India, registration is voluntary). However, if the firm is not registered, certain legal benefits cannot be obtained. The effects of non-registration are- (i) the firm cannot take any action in a court of law against any other parties for settlement of claims and (ii) in case of a dispute among partners, it is not possible to settle the disputes through a court of law.

5. Profit Sharing:

The partnership agreement must specify the manner of sharing profits and losses among partners. A charitable hospital, educa­tional institution run jointly by like-minded persons is not to be viewed as partnership since there is no sharing of profits or losses. However, mere sharing of profits is not a conclusive proof of partnership. In this sense, employees or creditors who share profits cannot be called partners unless there is an agreement between the partners.

6. Agency Relationship:

Generally speaking, every partner is considered to be an agent of the firm as well as other partners. Partners have an agency relationship among themselves. The business can be carried out jointly run by one nominated partner on behalf of all. Any acts done by a nominated partner in good faith and on behalf of the firm are binding on other partners as well as the firm.

Explanation:

YOU HAVE ASKED 5 BUT I HAVE POSTED 6 FEATURES

Answer 2

features of partnership firm