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Partnership, in law, term applied to an association of two or more people who have agreed to combine their labor, property,

and skill, or some or all of


them, for the purpose of engaging in lawful business and sharing profts and losses between them; in this defnition the term business includes every
trade, occupation, and profession. The parties forming such an association are known as partners. Partners may adopt a fctitious name or use a real
family name which must be registered.
A partnership can be formed only by contract. Any number of people may contract to form a partnership, and frms of partners may enter into
partnership with one another. New members may be admitted into an eisting partnership only with the consent of all the partners. The agreement of
partnership is generally for a defnite period of time or for a limited pro!ect; if no duration is specifed, it is said to be a partnership at will, and can be
terminated at any time by any partner. "y agreement of the members, a partnership may be dissolved or terminated and the terms of the partnership
agreement modifed at any time. #eath or bankruptcy of a partner, the insanity or misconduct of a partner, and the end of the period fed for the
duration of the partnership also operate to terminate the partnership.
A partner acts as an agent of the frm in the conduct of its business. Authority to act depends not only on the epress powers given to a partner by the
partnership agreement, but also on the implied powers resulting from the partnership relation and the nature of the business conducted. $n the case of a
partnership formed to conduct a wholesale or retail business, for eample, a partner has implied power to borrow money for trade purposes, to buy on
cash or credit, to make contracts and negotiable instruments to hire employees, to pay debts and sell or mortgage property for that purpose, and to
receive payment of debts owed the frm. A partner must, however, eercise the highest degree of good faith in all dealings with the other partners,
devote time and attention to the partnership business, and must account to the other partners for any secret profts made in the conduct of the
partnership business. The liability of a partner for partnership debts is unlimited, ecept when the partner is a limited one in a limited partnership %that
is, where the liability for the company&s debts and losses is limited', organi(ed in accordance with the provisions of a statute permitting such limitation
of liability. The partnership agreement may contain provision for dissolution or epulsion of a partner; the epulsion powers must be eercised in good
faith. The death of a partner, unless the agreement provides otherwise, terminates the partnership.
Statute, formal, written law enacted by a legislature, which may take the form of an act, as opposed to unwritten, or common, law, which is usually
determined by custom or court decisions. $n the )nited *ingdom, statute takes the form of an Act of Parliament, which may be either private or public.
Corporation, an organi(ation, recogni(ed and created by law, that allows people to associate together for a common purpose under a common name.
The corporation is a key economic institution, even though it is not the most prevalent form of business organi(ation.
"usiness corporations are known as !oint+stock companies because they are !ointly owned by di,erent people who receive shares of stock in echange
for an investment of money in the venture. $n business, corporate organi(ation has a number of advantages. -irst, a corporation eists independently of
its owners %the stockholders'. .econd, in "ritish law %and that of many other countries' the corporation is recogni(ed as a legal person with many of the
same rights that individuals have. These include the right to buy and sell property, to sue and be sued, and to enter into contracts. Third, the
corporation is an enormously successful device for raising vast amounts of business capital by pooling the fnancial resources of thousands of
individuals, something that cannot be done by other forms of business organi(ations %the individual proprietorship and the partnership'. This also serves
to spread the risks of a new venture among many people. -inally, the owners of a corporation are not liable for its debts beyond their investment.
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As a legal form of organi(ation, the corporation can be traced to 1oman times. $n the 5iddle Ages corporations were used to organi(e universities,
monasteries, and guilds. The voyages of eploration and discovery in the 67th and 68th centuries stimulated the use of the corporate form of
organi(ation, not only for the pursuit of trade but also to carry to distant lands the power of the governments that chartered the corporations. A !oint+
stock chartered company such as the "ritish 9ast $ndia 2ompany was both a business enterprise and a form of government. The American colonies were
established by corporate bodies chartered by the "ritish 2rown with the authority both to govern and to engage in trade.
A boom in !oint+stock ventures in the early 6:th century led to overdevelopment and ecessive speculation, resulting in the collapse of some large
corporate enterprises, including the .outh .ea 2ompany in 9ngland %in the .outh .ea "ubble scandal' and ;ohn 3aw&s 3ouisiana 2ompany in -rance. $n
68<= the "ritish Parliament passed the "ubble Act, which for more than a century after its passage severely restricted the use of corporate organi(ation
in business.
$n the 6>th century the $ndustrial 1evolution brought a tremendous increase in the number of business opportunities that re?uired large amounts of
fnancial capital for their eploitation. $n all the industrial nations laws were changed or enacted to permit corporate growth. Thus, industriali(ation
provided the impetus for the emergence of the modern corporation, especially the corporate giants that now dominate much of the world economy.
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5ost corporations are private; that is, they are owned through shares held by private individuals. .hares are traded in organi(ed markets such as the
world&s stock echanges. Public corporations are owned by governmental bodies.
The ma!ority of corporations are small, but in practice a few giant corporations dominate vast sectors of the global economy, accounting for much of
world economic output.
$n view of the growing importance of corporations, society is faced with three ma!or problems. -irst, the growth in corporate si(e has brought an
increasing separation of control from ownership. $n large frms the shareholder %and nominal owner' no longer eercises e,ective control; actual control
rests with management, which tends to be self+selecting and responsible only to it. .econd, the si(e of many corporations gives them economic power,
a development that permits escape from the discipline of the competitive market, because large corporations have substantial control over the prices
charged for the goods they produce. -inally, society has not been wholly successful in making certain that corporate performance serves the public
interest as well as the interests of owners and managers. 2ompetition laws may prevent the emergence of outright monopoly, but they do not
guarantee fair and e?uitable business competition.
These problems, present in the developed economies, have become more acute with the growing number and power of multinational corporations. The
multinationals, many of which are American, are business frms whose sales, work force, production facilities, and other operations are worldwide in
scope. They represent the latest development in the continuing growth of corporate organi(ation. Their power to create wealth on a worldwide scale
means that multinationals is likely to remain a dominant force shaping the world economy far into the future.
.tock %business', in business and fnance, a specifc type of negotiable instrument or security, although the term does have other meanings. $n
everyday usage, stocks are treated as being identical with securities and shares of ownership in a company or corporation, but, properly speaking;
stocks are securities with specifc characteristics. Their value is ?uoted in monetary amounts, and they bear a fed rate of interest, while shares are
?uoted in proportions of the total capital of a company and may have variable rates of interest. .tocks are fre?uently issued by local or central
governments to raise revenue, and government stocks are regarded as a solid and low+risk form of investment because they are backed by the credit of
the government. Also, the total accumulated goods held by a company, whether already made or in the process of manufacture, may be termed its
stock. The capital stock of a company or country is its total ?uantity of material capital.