In which form of organisation is a trade agreement made by one owner binding on the others. Give reasin?
Answers
Answer:
In partnership form of organization, a trade agreement made by one owner is binding on the others. The Indian Partnership Act, 1932 defines partnership as "the relation between persons who have agreed to share the profit of the business carried on by all or anyone of them acting for all." The definition of partnership highlights the fact that it is a business carried on by all or anyone of the partners acting for all. One partner is an agent of other partners as he/she represents them and thereby binds them through his/her acts. He/She is a principal as he/she too can be bound by the acts of other partners. Hence, every partner is both an agent and a principal. This is the reason why a trade agreement made by one owner is binding on the others.
Answer:
In partnership form of organization, is a trade agreement made by one owner binding on the others.
Explanation:
The limits of single proprietorship gave rise to the requirement for partnership as a form of organisation. Due to the restricted financial resources and administrative capabilities, a solo entrepreneur could not personally oversee all firm operations. Additionally, a person's ability to assume risk was constrained. When business operations began to grow, more money became necessary. For overseeing various tasks, more people were needed. At this point, it became necessary to associate more people. As a result, more people formed groups to conduct commerce. These individuals contributed their financial resources to the company and aid in business management. A partnership is an arrangement between two or more people who run a business together and split the profits and losses.
Thus, by forming a written or verbal agreement that they would share complete responsibility for the management of the business, two or more people can form a partnership.