Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. The owners of a partnership business are individually known as the "partners" and collectively as a "firm".
a partnership firm is governed by the provisions of Indian Partnership Act, 1932 and defines partnership as "a relation between persons who have agreed to share the profits of the business carried on by all or any of them acting for all".
FEATURES OF PARTNERSHIP
A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is also not essential. However, if the firm is not registered, it will be deprived of certain legal benefits
The minimum number of partners must be two, while the maximum number can be 10 in case of banking business and 20 in all other types of business.
The firm has no separate legal existence of its own i.e., the firm and the partners are one and the same in the eyes of law.
In the absence of any agreement to the contrary, all partners have a right to participate in the activities of the business.
Ownership of property usually carries with it the right of management. Every partner, therefore, has a right to share in the management of the business firm.
Liability of the partners is unlimited. Legally, the partners are said to be jointly and severally liable for the liabilities of the firm. This means that if the assets and property of the firm is insufficient to meet the debts of the firm, the creditors can recover their loans from the personal property of the individual partners.
Restrictions are there on the transfer of interest i.e. none of the partners can transfer his interest in the firm to any person (except to the existing partners) without the unanimous consent of all other partners.
The firm has a limited span of life i.e. legally; the firm must be dissolved on the retirement, lunacy, bankruptcy, or death of any partner.