1. TYPES OF PARTNERS
1.1. Active Partner
1.2. Sleeping/ Dormant Partner
1.3. Salaries Partner
1.4. Partner by Holding Out
2. COMPANY
2.1. A business organization of two or more individuals
2.2. Registered under Companies Act 1965
3. NUMBER OF PARTNERS
3.1. Section 47(2) of the Partnership Act 1961
3.1.1. The number of partners in a partnership cannot exceed 20, because this contravenes section 14(3)(b) of the Companies Act 1965, unless the partnership is one of professionals, e.g. doctors, lawyers or accountants.
4. LIABILITY
4.1. A partnership is not a legal entity separate from its members or partners.
4.2. Each partner is personally liable to outside creditors to the full extent of the partnership debt.
4.3. Partners cannot limit their liability to creditors of the partnership.
4.4. If a partnership is dissolved, then all outside creditors must be paid in full, before the partners are entitled to a return from the partnership.
5. LEGAL ACTIONS
5.1. A partner is able to bring an action enforcing rights of the partnership in the names of all partners.
5.2. Relationship exists under law of agency.
5.3. Difficulties which may be caused by requiring all partners to be parties to any legal action have been largely overcome by court rules, which allow a partnership to sue and be sued in its firm’s name.
5.4. Thus, the partners may sue and be sued collectively by using the name of the partnership firm.
5.5. However, this does not alter the fact that the action is being brought by or against the partners
6. DURATION OF EXISTENCE
6.1. Exist for a fixed term or for as long as the partners desire
6.2. Automatically dissolves on the retirement, death or bankruptcy of a partner.
6.3. Subject to an agreement to the contrary by the partners.
7. DISSOLUTION OF PARTNERSHIP
7.1. Agreement
7.2. Notice
7.3. Death
7.4. Bankruptcy
7.5. Court order
7.6. Charge
7.7. Illegality of Partnership
8. TYPES OF BUSINESS ORGANISATIONS
8.1. A SOLE PROPRIETORSHIP
8.1.1. One man is in business for himself
8.1.2. No special rules governing sole proprietorship
8.1.3. Treated no differently from anyone else at law
8.1.4. Use own to resources to provide skill, labor, capital, and other resources to run the business
8.1.5. Unlimited liabilities
8.1.6. Registered under Registration of Business Act 1956
8.1.7. ADVANTAGES
8.1.7.1. Ease of organization : Except for registration with the Registry of Businesses, the proprietor may begin to do business without any notice, agreement or permission for the business’s existence
8.1.7.2. Flexible management : He does not need to consult other people before making any business decisions. He has full control and is free to operate the business in any way he likes.
8.1.8. DISADVANTAGES
8.1.8.1. His liability for the debts of the business is unlimited.
8.1.8.2. This means that business debts are payable from personal, as well as business, assets.
8.1.8.3. If the business does not have enough assets to pay business debts, the proprietor’s personal assets may also betaken by the business creditors.
8.1.8.4. The sole proprietor cannot limit his liability to only the investment in the business.
8.2. A PARTNERSHIP
8.2.1. A partnership to exist, two or more persons must be ‘carrying on business in common’
8.2.2. In Section 2, ‘business’ is defined to include ‘every trade, occupation or profession’
8.2.3. Exist when two or more persons pool their skills, labor, capital and other resources together to form a business jointly
8.2.4. They are formed to operate concerns varying from trading firms to professional firms (such as legal practices, accounting practices and medical practices)
8.2.5. Under Partnership Act 1961
8.2.6. Applied English Court decision