What are the types of Partnership? As we know that according to section 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”.
TYPES OF PARTNERSHIP
Basically, there are two types of partnership form of the business organization i.e.
- Limited partnership
- Unlimited Partnership
Limited partnership is a form of business organization in which there is at least one partner who has limited liability up to the amount of his capital and there is at least one partner who has unlimited liability. In case of loss, the partners having limited liability are bound to bear up to the amount of their capital and no more can be collected from them. The limited partners cannot take part in the management of the firm but they can check and inspect the books of accounts. The registration of such firm is compulsory. The partnership Act !932 does not deal with this kind of partnership So, it IS not formed in our country. It is formed under the English law partnership Act 1907.
Unlimited partnership is a form of business organization in Which all the partners have unlimited liability. In case of loss, if the assets of the firm are not sufficient to meet the claims of the creditors, the personal property of the partners can also be used for this purpose. This type of partnership is formed under; The Partnership Act 1932 and is further subdivided under the following headings;
(a) Partnership at will
(b) Particular partnership
(c) Partnership for the fixed period
(A) PARTNERSHIP AT WILL
According to section 7 of The Partnership Act 1932, where no provision is made by contract between the partners for the duration of their partnership, or for the termination of their partnership, the partnership is ‘Partnership at Will” So when the partnership is formed for an indefinite period of time or is nothing mentioned for the termination of the partnership, the partnership is said to be a partnership at will. It may be created under the following circumstances.
(l) INDEFINITE PERIOD
When a partnership is formed for an indefinite period of time the partnership is called a partnership at will.
(Il) COMPLETION OF VENTURE
When the partnership is formed for the completion of a particular venture, but it remains to continue after the completion of the venture without any new agreement, the partnership is known as a partnership at will.
(Ill) EXPIRY OF FIXED PERIOD
When the partnership is formed for a fixed period of time but remains to continue after the expiry of the fixed period without any new agreement. The partnership is said to be a partnership at will. In case of Partnership at will when any partner gives notice for the dissolution of the firm, the partnership is dissolved without any delay.
(B) PARTICULAR PARTNERSHIP
According to section 8 of the partnership Act 1932, a person may become a partner with another person in particular adventures or undertakings. So when a partnership is formed for the completion of the particular venture, job or undertaking, the partnership is known particular partnership.
(C) PARTNERSHIP FOR FIXED PERIOD
When the partnership is formed for a definite (fixed) period of time the partnership is known as a partnership for a fixed period.