explain different types of partnership on the basis of duration and liability
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Answer:
Explanation:
Kinds of Partnership
A partnership between two people is when they run a business together with the intention of sharing the profits amongst themselves. However, there can be various types of partnerships according to their duration or the intent of their creation. Let us take a look at the kinds of partnerships like a general partnership, partnership at will etc.
Kinds of Partnership
The distinction between partnerships can be done on the basis of two criteria. They are as follows
With Regard to the Duration of the partnership – either Partnership at Will or Partnership for Fixed Duration
With regards to the extent of the business carried by the partnership – either General Partnership or Particular Partnership
So let us take a look at these kinds of partnership in some detail.
Kinds of Partnerships: General Partnership, Partnership at Will etc
1] Partnership at Will
When forming a partnership if there is no clause about the expiration of such a partnership, we call it a partnership at will. According to Section 7 of the Indian Partnership Act 1932, there are two conditions to be fulfilled for a partnership to be a partnership at will. These are
There is no agreement about a fixed period for the existence of a partnership.
No provision with regards to the determination of a partnership
So if there is an agreement between the partners about the duration or the determination of the firm, this will not be a partnership at will. But if a partnership was entered into a fixed term and continues to operate beyond this term it will become a partnership at will from the expiration of this term.
2] Partnership for a Fixed Term
Now during the creation of a partnership, the partners may agree on the duration of this arrangement. This would mean the partnership was created for a fixed duration of time.
Hence such a partnership will not be a partnership at will, it will be a partnership for a fixed term. After the expiration of such a duration, the partnership shall also end.
However, there may be cases when the partners continue their business even after the expiration of the duration. They continue to share profits and there is an element of mutual agency. Then in such a case, the partnership will now be a partnership at will.
3] Particular Partnership
A partnership can be formed for carrying on continuous business, or it can be formed for one particular venture or undertaking. If the partnership is formed only to carry out one business venture or to complete one undertaking such a partnership is known as a particular partnership.
After the completion of the said venture or activity, the partnership will be dissolved. However, the partners can come to an agreement to continue the said partnership. But in the absence of this, the partnership ends when the task is complete.
4] General Partnership
When the purpose for the formation of the partnership is to carry out the business, in general, it is said to be a general partnership.
Unlike a particular partnership in a general partnership the scope of the business to be carried out is not defined. So all the partners will be liable for all the actions of the partnership.
Answer:
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