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Introduction
to Business MGT 211
VU
LESSON
6
PARTNERSHIP
(Continued)
Partnership is
the second stage in the
evolution of forms of business
organization. It means
an
association of two or more
persons to carry on a business
for profit.
According
to Partnership Act,
1932,
"Partnership
is the relation between
persons who have agreed to
share the profits of
a
business,
carried on by all or any of
them active for
all."
PARTNERS
"The
individuals who comprise a
partnership are known as
partners."
KINDS
OF PARTNERS
Partners
can be classified into
different kinds, depending
upon their extent of
liability,
participation
in management, share of profits
and other facts.
1.
Active Partner
A
partner who takes active
part in the affairs of
business and its management
is called active
partner.
He contributes his share in
the capital and is liable to
pay the obligations of the
firm.
2.
Secret Partner
A
partner who takes active
part in the affairs of the
business but is unknown to
the public as a
partner
is called secret partner. He is
liable to the creditors of
the firm.
3.
Sleeping Partner
A
partner who only contributes
is the capital but does
not take part in the
management of the
business
is known as sleeping partner. He is
liable to pay the
obligations of the
firm.
4.
Silent Partner
A
partner who does not
take part in the management
of business but is known to
the public as
partner
is called silent partner. He is
liable to the creditors of
the firm.
5.
Senior Partner
A
partner who invests a large
portion of capital in the
business is called senior
partner. He has
a
prominent position in the
firm due to his experience,
skill, energy, age and
other facts.
6.
Sub-Partner
A
partner in a firm can make
an agreement with a stranger to
share the profits earned by
him
from
the partnership business. A
sub-partner is not liable
for any debt and
canot interfere in
the
business matters.
7.
Junior Partner
A
person who has a small
investment in the firm and
has a limited experience of
business is
called
junior partner.
8.
Major Partner
A
major partner is a person
who is over 18 years of age.
A person is allowed to make
contract
when
he has attained the age of
majority.
9.
Minor Partner
A
person who is minor cannot
enter into a valid contract.
However, he can become a
partner
with
the consent of all other
partners. A minor can share
profits of a business but
not the
losses.
28
Introduction
to Business MGT 211
VU
10.
Nominal Partner
A
partner who neither
contributes in capital nor
does he take part in the
management of the
business
but allows he name to be
used in the business is
known as nominal partner. He
is
individually
and jointly liable for
the debts of the firm
along with other
partners.
11.
Deceased Partner
A
partner whose life has
expired is known as deceased
partner. The share of
capital and
profit
of such partner is paid to
his legal heirs in lumpsum
or in installment.
12.
Limited Partner
A
partner whose liabilities
are limited to his share in
business is called limited
partner. He
cannot
take active part in the
management of the
firm.
13.
Unlimited Partner
A
partner whose liabilities
are unlimited is known as
unlimited partner. He and
his personal
property
both are liable to clear
the debts of the
firm.
14.
Incoming Partner
A
person who is newly admitted
in the firm with the
consent of all the partners
is called
incoming
partner. He is not liable
for any act of the
firm performed before he
became the
partner
unless he agrees.
15.
Retired Partner
A
partner who leaves the
firm due to certain reasons
is known as retired partner or
outgoing
partner.
He is liable to pay all
the obligations and debts of
the firm incurred before
his
retirement.
16.
Partner for Profits
only
If
a partner is entitled to receive
certain share of profits and
is not held liable for
losses is
known
as partner in profits only. He is
not allowed to take part in
the management of the
business.
17.
Quasi Partner
A
person, who was the
par4tner of a firm but has
now retired from active
participation in
business
and has left his
capital in the business as a
loan, receiving interest on
it, is known as
quasi
partner.
18.
Partner by Estoppels
A
person who holds himself
out as a partner of a firm,
before a third party or
allows other to do
so,
though he is not a partner of
that firm, is called partner
by estoppels or holding out
partner.
He
is not entitled to any right
like other partners of the
firm. He is not entitled to
any right like
other
partners of the firm. He is
personally liable to the
third party for the
credit given to the
firm,
on the faith of his
representation.
What
are kinds of
partnership?
KINDS
OF PARTNERSHIP
There
are three kinds of
partnership which are
described as under:
1.
Partnership
at will
2.
Particular
partnership
3.
Limited
partnership
29
Introduction
to Business MGT 211
VU
PARTNERSHIP
AT WILL
If
the partnership is formed
for an undefined time, it is
called partnership at will. Any
partner
can
dissolve it at any time by
giving the notice.
According
to Partnership Act,
1932:
"If
no provision is made in the
agreement regarding the
partnership, it is called
partnership
at will."
Partnership
at will may be created under
the following
circumstances:
1.
Indefinite Period
If
partnership has been formed
for an indefinite period, it is
called partnership at
will.
2.
Existence after Completion of
Venture
If
partnership has been formed
for a particular venture and
after completion such
venture it
remains
continue, it becomes a partnership at
will.
3.
Existence after Expiry of
Period
If
partnership has been formed
for a definite time period,
so after the expiry of this
period, it
becomes
partnership at will.
PARTICULAR
PARTNERSHIP
If
the partnership is formed
for a particular object of
temporary nature, it is called
particular
partnership.
On completion of a particular venture, it
comes to an end. Under this
no regular
business
is done. For example,
partnership for the
construction of a building and
partnership
for
producing a film.
LIMITED
PARTBNERSHIP
Limited
partnership is that in which
liabilities of some partners
are limited up to the amount
of
their
capitals. In this partnership,
there is at least one
partner who has unlimited
liability.
In
Pakistan, this type of
partnership is not formed.
There is a separate partnership
act for it.
MAIN
FEATUTRES
Main
features of partnership
are:
1.
Limited Partner
There
is at least one partner who
has limited
liability.
2.
Unlimited Partner
There
is at least one partner who
has unlimited
liability.
3.
Number of Partners
There
are at least two partners or
maximum 20 in an ordinary business
and not more than
10
in
banking business.
4.
Admission of New
Partner
New
partners may be admitted in
this partnership without the
consent of limited partners
but
with
the consent of unlimited
partners.
5.
Registration
The
registration of this partnership is
compulsory by law.
30
Introduction
to Business MGT 211
VU
6.
Transferability of Shares
Limited
partner can transfer his
shares to any other person
with the consent of all
other
partners.
7.
Inspection of Books
Limited
partner has a right to
inspect the books of
accounts.
8.
Rights of Suggestions
Limited
partner has a right to give
suggestions to others who
manage the business.
9.
Participation in Management
A
limited partner cannot take
part in the management of
the business.
10.
Withdrawal of Capital
A
limited partner cannot
withdraw his capital until
he remains in partnership
business.
11.
Separate Legislation
It
is enrolled under the
Limited Partnership Act,
1907, instead of Partnership
Act, 1932.
TERMINATION
OF PARTNERSHIP
All
forms of partnership under
Islamic law may be
terminated as:
1.
Notice
In
all the above forms of
partnership each partner has
a fight to terminate the
partnership by
giving
notice to other
partners.
2.
Death
Partnership
is also terminated on the
death of a partner.
31
Table of Contents:
- INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
- BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
- SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
- PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
- PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
- PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
- ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
- JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
- LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
- WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
- COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
- WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
- HUMAN RESOURCE MANAGEMENT:Human Resource Planning
- STAFFING:STAFFING THE ORGANIZATION
- STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
- BUSINESS MANAGER’S RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
- COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
- COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
- STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
- MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
- MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
- THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
- MARKET RESEARCH:Market information, Market Segmentation, Market Trends
- MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
- MARKETING RESEARCH:Data Warehousing and Data Mining
- LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
- UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
- THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
- PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
- PROMOTION:Information and Exchange Values, Promotional Strategies
- ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
- PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
- SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
- THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
- THE PLANNING PROCESS:Strengths, Weaknesses, Threats
- TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
- TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
- TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
- BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
- NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
- BUSINESS ORGANIZATIONS:Organization as a System
- ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
- TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
- FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures