DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : R.Dasharatham
Designation : Lecturer
Branch : D.C.C.P.
Institute : GPW, Warangal
Year : I year
Subject : Business Organization
Subject code : CCP-104
Topic : Forms of Business Organization-Sole Trading
and Partnership
Duration : 50 mts
Sub topic : Partnership
Teaching Aids: :P.P.T., Animation, Photos

CCP104.13 1
Objectives

On completion of this lesson, you would be able to:

- Define partnership.
- List the Characteristics of Partnership.

CCP104.13 2
Recap
We know:

 Sole trading – meaning & features

 Merits & Demerits

CCP104.13 3
If sole trader suffers from limited capital, limited
knowledge or extending his business… then what
is the option?

CCP104.13 4
PARTNERSHIP

CCP104.13 5
Do you know what is Partnership?

CCP104.13 6
According to Sec.4 of Indian
Partnership Act, 1932

“ The relation between persons, who have agreed to share

the profits of a business carried on by all or any one of
them acting for all.”

CCP104.13 7
Partnership

• Association of two or more persons

• Agreement
• Sharing profits
• Business carried by all or any one of them
• Everyone should act for all.

CCP104.13 8
CHARACTERISTICS OF PARTNERSHIP
FROM THE DEFINITION

CCP104.13 9
CHARACTERISTICS OF
PARTNERSHIP
Existence of business:
 There must be a legal business
 Not charitable work

CCP104.13 10
CHARACTERISTICS OF PARTNERSHIP

Plurality of persons:
• Two or more persons
• one person cannot enter into partnership with himself

CCP104.13 11
CHARACTERISTICS OF PARTNERSHIP

Contractual relationship:
 Only competent person can enter into contracts
 Minors not eligible

CCP104.13 12
CHARACTERISTICS OF PARTNERSHIP

Profit motive:
 The purpose must be to earn profits
 Must be agreement to share profits

CCP104.13 13
CHARACTERISTICS OF PARTNERSHIP

Principal-Agent relationship:
 Business carried on by all or anyone
 Each partner is agent to all other partner

CCP104.13 14
CHARACTERISTICS OF PARTNERSHIP

Financing:
• The capital contribution need not be in proportion
to their profit-sharing ratio.

CCP104.13 15
CHARACTERISTICS OF PARTNERSHIP

Control:
• It vests with all the partners, as no major decision
can be taken without the unanimous will of all the
partners.

CCP104.13 16
CHARACTERISTICS OF PARTNERSHIP

Management:
• Every partner has the right to take active part in the
management of the firms affairs. But in many cases the
managing partner looks after the work of the firm.

CCP104.13 17
CHARACTERISTICS OF PARTNERSHIP

Duration:
•The partnership firm continues at the pleasure of the
firm. Legally, it comes to an end if any of the partners
dies, retires or becomes insolvent.

CCP104.13 18
 Features of partnership

•Since partnership rests on a contract among

persons, its formation does not involve any
special legal problems.
•Easy to form
•Agreement will be there between persons
•No legal formalities

CCP104.13 19
CHARACTERISTICS OF PARTNERSHIP

Taxation:
 The income of a partnership is liable for tax, like
any other individual’s income.

CCP104.13 20
CHARACTERISTICS OF PARTNERSHIP

Unlimited liability:
 The individual liability of the partners is unlimited in
respect of the firms debts.
 The creditors of the firm can recover their dues from the
property of all partners if firm’s assets are insufficient.

CCP104.13 21
CHARACTERISTICS OF PARTNERSHIP

Restriction on transfer of interest:

 A partner cannot transfer his share to an outsider without
the consent of the other partners.

CCP104.13 22
Summary

o Definition of Partnership
o Characteristics of partnership firm.

CCP104.13 23
Quiz

1. What is maximum no. of partners for a

trading concern?

a. 10
b. 30
c. 40
d. 50

CCP104.13 24
2. What is the least no. of persons to form a
partnership firm?

A) 1
B) 2
C) 3
D) 4
Ans: B

CCP104.13 25
Frequently asked Questions

1. Define Partnership?

2. What are the characteristics of Partnership firm?

CCP104.13 26
Assignment

 List the features of partnership

CCP104.13 27