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Law of Partnership History:

Law of Partnership is contained in the Partnership Act, 1932 which came into force on 1st October 1932. It extends to the whole of Pakistan (Sec.3)

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Law of PartnershipDefinition: “A Partnership is a Voluntary

association of two or persons, who contribute,money, Property, time, care or skills, to carry on, as co-owners, a lawful business for profits and to share the profits and losses of the business”

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Law of PartnershipCharacteristics:1. Legal entity2. Agreement3. Number of Partners 4. Existence of Business5. Sharing of Profit6. Unlimited Liability7. Capital

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Law of Partnership8. Good faith9. Management10.Control11.Transfer of

Interest 12.Duration

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Law of Partnership1. Legal Entity:

A partnership has no separate legal entity apart from its members.The firm and the partner are not separate from one another.

2. Agreement:A partnership is the result of an agreement b/w personsAn agreement may be written or oral

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Law of Partnership3. Number of Partners

There must be at least two persons to form a partnershipThe maximum limit to the number of partners is 20

4. Existence of Business: The partners must agree to carry on a business

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Law of Partnership5. Sharing of Profit;

The agreement b/w the parties must be to share the profits of a businessDistribution of Profit will be among the partners according to their agreement

6. Unlimited Liability:The liability of all the partners is unlimited in case of firm’s debt

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Law of Partnership7. Capital:

The Capital of the firm is supplied by all the partnersIn some cases not necessary to contribute the capital by all the partners

8. Good Faith: A Partnership business is based on mutual

confidence and trust of the partners

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Law of Partnership9. Management:

Every Partner can take part in the conduct and management of the business of the firm

10. Control: Control is depend on the terms of the firms All partners take an active part in the conduct of the business

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Law of Partnership11. Transfer of Interest:

Shares cannot be transfer to outsider without the consensus of all the partners

12. Duration: Partnership continues at the will of the partners

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Kinds of Partners1. Active Partners2. Sleeping Partners3. Nominal Partners4. Senior Partner5. Junior Partner6. Partner in Profit only7. Secret Partner8. Minor Partner

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Kinds of Partners1. Active Partners:

Who takes active part in the management

2. Sleeping Partners:Who not take active part in the management

3. Nominal Partner:Who lends his name and reputation to the firm.

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Kinds of Partners4. Senior Partner:

Who has a more investment in the firm and receive more profit

5. Junior Partner: Opposite to the senior partner Young person and recently join the partnership

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Kinds of Partners6. Partner in Profit only:

Who share the profits of the firm but not liable for losses

7. Secret Partner:Whose membership is kept secret from outsiders

8. Minor Partner:A person who has not competed 18 year of age

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Types of Partnership1. Partnership-at-will

2. Particular Partnership

3. Limited Partnership

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Types of Partnership1. Partnership-at-will:

Where no provision is made in the agreement regarding the duration of the partnershipAny partner can terminate it any time by giving the noticeFor unlimited period Formed for particular project

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Types of Partnership2. Particular Partnership:

When partnership is formed to

do a particular business or for a particular periodFor example: partnership for work on the production of film

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Types of Partnership3. Limited Partnership:

Formed in Act 1907of EnglandIn Pakistan there is no limited partnership

Following are the features in Limited PartnershipOne or more partners are with limited liabilityAt least one Partner with unlimited liabilityThe firm must be registeredLimited partners can inspect the books of the firm at any timeLimited partner cannot take active part in the management

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Video DiscussionThe Five Key Factors can determine the viability to Any Business Partnership:

1. Values2. How do you deal with the

conflict3. Work ethics4. Integrity5. Vision

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“If you don't like any rule,just follow it,reach the top and change the rule”

(Napoleons)

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