Law of Partnership

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Types of business
Sole proprietorship in Pakistan Partnership in Pakistan Limited liability company in Pakistan

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Why Partnership?
Easy Formation More Capital Better Management Skilled Employees Easy Dissolutions

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Introduction
Partnership is governed in Pakistan, through the provision of the Partnership Act, 1932.

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Meaning
A Partnership is a Voluntary association of Two or more persons, who contribute , Money, property , time , skill to carry on business for profit and to share the losses of the business.

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Definition
Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Sec-4.

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Definition
Prof Haney: Partnership is the relation between persons to make contracts who agree to carry on a lawful business with a view to gain.

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Characteristics
Legal Entity.
A Partnership has no separate legal entity apart form its members. Firms and the partner are not separate from one another. The rights and liabilities of the firm are considered the rights and liabilities of the partner.
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 Unlimited Liability
In case of loss if the business sources are insufficient to meet claim of the creditors, the private properties of the partners can be sold.

Agreement
A partnership is the result of an agreement between persons.

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 Control
Depends on the Terms of the Agreement.

Mutual Agency
Each partner acts as agent of the other partners of the firm. Because he binds himself to the activities of other partner.

Numbers of Partners.
At least 2 persons Maximum 20 persons
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Sharing of Profits Share the profit of the business according to their agreement. If no agreement then Equally.

Loss according to agreed ratio.

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Partnership Deed
The Partnership agreement in writing is called Partnership Deed. The Partnership deed contains the Provisions: 1. The Name of Firm. 2. The names and address of all Partners. 3. The nature of Business of A firm
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4. The ratio of sharing the ration and losses. 5. The Rights , duties and Liabilities of a Partner. 6. The restrictions on partners , if any. 7. The Rules regarding the Admission , Retirement , death and Expulsion of partner from frim.
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8. The keeping of proper books of accounts and preparation of Accounts. 9. The Circumstance under which the firm shall dissolve. 10. The Methods of Solving disputes among the partners and appointment of Arbitrator.

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Kinds of Partners
Liability Participation in Management Shares of Profit , Etc any other basis

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 Active Partner Takes an active part in the Management Public Notice before Retirement Also known as Working Partner. Sleeping Partner/ Dormant Partner Does not take an Active Part in Management, Notice is not required in case of Retirement, Also liable.
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 Partners in Profits only. Shares the Profit of the firm. Not liable for the Losses Secret Partner Whose membership Kept secret from Outsiders
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 Senior Partner Key role in Management , due to experience ,age, capability , and other skills. Besides that investment more in the Business. Junior Partner
Less experience , small investment,

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Minor Partner Competent to contract 18 age

With the Consent of all the Partners

He may be admitted to the benefits of Partnership by an agreement with his guardian.
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 Nominal Partner One who lends his name and reputation to the firm, does not invest, does not participate, he is liable.

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Types of Partnership
Partnership-at-will
No provision is made in the agreement regarding the duration of firm. Formed for Unlimited Period. Project complete after it continues. Notice of Termination , given by any partner at any time.
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Particular Partnership
Formed to do a particular business. Or For a particular period. A Partnership is dissolved immediately on he completion of the particular business.

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Limited Partnership. (England based)

Some Partners may be with Limited Liability At least on have unlimited Liability Registered Firm Limited partner inspects the books

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DISSOULTION OF FIRM
BY AGREEMENT COMPULSORY CONTINGENT BY NOTICE BY THE COURT
Insanity , Permanent Incapacity , misconduct, Breach , Transfer of interest, Continuous losses , Just and Equitable
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