Hello welcome to this blog on meaning and characteristics of partnership in Commerce:
Table Of Contents
- Meaning Of Partnership
- What constitutes a partnership
- Features or characteristics of partnership
Meaning Of Partnership
Definition: A partnership may be defined as a type of business organization in which two or twenty persons agree legally to set up and manage a business outfit with the sole aim of making profit.
A partnership is usually formed by an association of two to 20%, who by an agreement (usually legal) decide to pull their resources (capital) or skill or both together and establish a business Enterprise. The people involved in partnership agreement are called partners and they share the profit, loses and risk of The Business. When partners are involved in banking Enterprise, the number required by law is between two and ten. Some examples of partnership in Nigeria are Gani Fawehinmi and Co. (Law chamber), Diya Fatimilehin and Co. (Estate firm).
Partnership is defined in section 1 of the partnership act of 1980 as a relationship which consists between persons carrying on a business in common with a view of profit.
Pallock defined it, as the relationship which subsists between persons who have agreed to share the profit of business carried on by all of them for the benefits of all of them. The relationship normally emanate from an agreement which may be expressed or implied.
What Constitutes a partnership
- There must be a business relationship among people carrying on a business.
- There must be common participation, i.e, all partners are involved in the management of the business.
- It must be with a view to making profit.
Features or Characteristics of Partnership
- Ownership: The partnership is owned by two to twenty persons but in a banking Enterprise it is between two and ten.
- Objective: The main objective of the partnership is to make profit.
- Source of capital: The capital required to set up the business is provided by The partner as based on legal agreement.
- Liability: The partners have unlimited liability.
- Life span: The life span of the partnership depends on the agreement signs by the partners involved.
- Legal entity: It is not a legal entity as the partners are not separated from the business.
- Management: The business is controlled and managed by the partners.
Revision Questions
- What do you understand by the term partnership?
- States what constitutes a departmentship.
- State the meaning and characteristics of partnership in Commerce.
In my next blog, we will be looking at the types, advantages and Disadvantages of partnership in commerce. To join the class [Click Here]