Who can be a Partnership?
1. Person- According to Sec. 11 of the Indian Contract Act, every person who is of the age of majority according to law to which he is subject to and who is of sound mind and is not disqualified from contracting by any law to which he is subject, is competent to become a partner. The term ‘person’ does not include a partnership firm or a limited Company. For instance, a firm A cannot form a partnership with firm B. But all the partners of firm A and all the partners of firm B can form single partnership, subject to the rules regarding the number of partners.
2. Minor- A minor cannot be a partner. Sec. 30 (1)
lays down that “A person who is a minor according to the law to which he is subject may not be a partner in a firm, but with consent of all the partners for the time being, he may be admitted to the benefits of partnership.
3. Lunatic- A person who is of unsound mind cannot become a partner.
4. Alien Enemy- An alien enemy cannot enter into a contract of partnership though an alien friend can do so.
5. Company- A corporation being an artificial person ship agreement.can neither become a partner nor can it enter into a partner-
6. Woman- A woman, married or unmarried, can be a partner.
7. Insolvency- When the partner of a firm is adjudicated an insolvent, he ceases to be a partner from the date on which the order of adjudication was passed by the court.
Formation of Partnership
A partnership is based on an agreement. It is created by contract only and not by status or operation of law. The agreement may either be express or implied. The essence of partnership is mutual trust and confidence. There must be free and genuine consent of the parties who must be competent to contract. With a view to carrying on the partnership for long time and to avoid any differences among the partners in future, it is essential that all the terms and conditions of partnership are agreed upon: An oral agreement may be alright till the going is normal: but in times of adversity, there may be dispute among the partners. Therefore, it is in the interest of the partners that the agreement must be in writing. The document in which the respective rights and obligations of the members of a partnership are set forth is called a “Partnership Deed”. It should be drafted with care and be signed by all the partners. It must bestamped in accordance with the Indian Stamp Act. Each partner should have a copy of the Deed. The firm should be registered and a copy of the Deed should be flied at the time of registration with the Registrar of Firms because in the absence of such registration partners cannot enforce the conditions laid down in the Deed through a court of law.
Duration of Partnership
Where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is “partner- ship at will”. [section 7]. – – Partnership ‘at will’ means any partner can dissolve a firm by giving notice to other partners (or he may express his intention to retire from partnership) – – Partnership deed may provide about duration of partnership (say 10 years) or how partnership will be brought to end. In absence of any such term, the partnership is ‘at will’. — In case of ‘particular partnership’, the partnership comes to end when the venture for which it was formed comes to end.