Meaning And Meaning Of Partnership

Definitions on partnership:

The Indian Partnership Act, 1932, Section 4, defined partnership as "the relation between persons who have agreed to share the profits of business carried on by all or any of them acting for all". A partnership is not necessarily created by agreement in writing. It could be by oral agreement also or an agreement can be inferred by the conduct of the parties. Therefore, apart from a written agreement the actual conduct or intention of the parties is important in deciding questions of partnership, but intention is often incapable of proof and has to be only an inference. The Uniform Partnership Act of the USA defined a partnership "as an association of two or more persons to carry on as co-owners a business for profit".

Essentials Ingredients of Partnership:

Partnership rests on the agreement and so long as the agreement contemplates an outgoing and an incoming on the joint account in respect of business, the partnership is complete and all subsequent rights and liabilities are governed by law which relate to partnership. It is not the subsequent happenings which determine the question which relate to partnership.

There are three essentials ingredients for there to be a partnership. These are:

1. There must be agreement entered into by two or more persons;

2. The agreement must be to share the profits of the business;

3. The business must be carried on by all or any of them acting for all.

Where last two ingredients are found to be missing, in that there was no agreement between the parties to share the profits, nor there was any mutual agency between the parties by which each partner would act both as principal and as an agent or the other, it can be said as the

There is no similar provisions in the English Act but in view of the vast extent of non-contractual quasi-partnership relations in India of which the Hindu trading family is the outstanding example it is deemed expedient to insert this clause in the bill to prevent all possible doubts."

It will not be out of place here to mention that in the course of our discussions we have considered whether some provision should be made for the rights and obligations of the members of a joint Hindu family in cases where the Karta of a joint family enters into partnership with a stranger acting for the joint family and employing the family assets. the decision in India have uniformly held that in such a case the Karta or the manager alone must be taken to be the partner and the stranger is entitled and bound to deal only with the Karta . I think that since the Hindu law permits a Karta to enter into partnership in this way the members of the family who are not parties to the contract should not be clothed with any rights against the stranger partners. It seems to us that to introduce provisions enabling the other members of the family to intervene in the affairs of the firm would introduce inextricable confusions