Essentials Of Partnership :
According to Section 4, the following essentials are necessary to constitute a
‘Partnership’.
1. There should be an agreement between the persons who wants to be partners.
2. The purpose of creating partnership should be carrying on of business
3. The motive for the creation partnership should be earning and sharing profits.
4. The business of the firm should be carried on by all of them or any of them acting
for all, i.e., in mutual agency
When all the above elements are present in certain relationship that is known as
‘partnership’. Persons who have entered into partnership with one another are called
individually ‘partners’ and collectively ‘a firm’ and the name under which their
business is carried on is called the ‘ firm name’.
When a person enters into a partnership and if he brings a portion of land
which is not rented or is for usage or used on the behalf of the firm it would
be considered as the property of the firms. Further when the partnership will
dissolve the land shall be distributed between the partners as it becomes the
property of the firm.
Partnership deed is registered at the firms and society office or else it shall
be made on Rs.750 stamp paper and can be notarised.
Examples:
A and B buy 100 tons of oil which they agree to sell for their joint account. This forms a
partnership and A and B are considered as partners.
A and B buy 100 tons of oil and agreed to share it among them. It does not form a
partnership as they had no intention to carry out business.
