Partnership and Types of Partnerships

This article describes about the different types of Partnerships and types of partnerships according to the Partnership act of India in 1932 and the Indian Contract Act of 1872. Read to know the Elements of Partnership, partnership deed, Registration of Firm and other related information.


Partnership Act of India 1932 has several measures that revolutionized the business which were following the Indian Contract Act of 1872.
This defines the partnership as a business carried on by all or any one of them for all.

Elements of Patnership

Important elements of partnership are :

(1) Association of 2 or more persons
(2) Existence of contract
(3) Carrying on a business
(4) Sharing of Profits
(5) Mutual Agency

A parnership firm cannot create another partnership firm as they cannot enjoy the legal person in action. Ther must exist a contract between the partners.

Partnership Deed

Partnership deed is the document that deals with the rights and obligations of the partnership. It not only contains the information about the name, contact of the business firm but also the time period of the partnership, profit sharing ratio, type of business etc.

Registratino of Firm

Business registration is very important in running a business. Registration of a company is very important as there are many provisions in the company registration. If a company is not registered then there is

* No suit against the partners
* No suit against third parties
* No suit of set off

Types of Partnership

Following are the important types of partnerships.

* Active or actual partnership
* Dormant or sleeping partnership
* Nominal partnership
* Sub partnership
* Partnership in profit only

Active/Actual Partnership

In this type of partnership the partners are actively involved in the business and business relations and other aspects of the partnership firms.

Dormant/Sleeping Partnership

In a dormant or a sleeping partnership, the partner will lend his name to the business but neither interested in the business nor the profit sharing from the business.

Nominal Partnership

These type of partners are known to the outsiders only. They will not actually involve in the business.

Sub Partnership

If a partner wants to share his profits to others he can enter into the partnership with others stating the profit sharing levels or ratio. This is sometime referred to as parnership marketing.

Partnership in Profit only

Partners who does not like loss bearing can enter into partnership sharing only the profit. Such a parnership is called as partnership in profit only.


Author: Prashant Sultania19 Nov 2009 Member Level: Gold   Points : 1

Thanks dear,
For such a resource. I am from BCOM background.So, i know that patnership is important part of business. After seeing and reading the articles. All the rules of partnership are recall back.


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