bind the others and the assets of the partners may be taken for debts of partnership”. Characteristics The main characteristics of partnership are given below: i. Contractual Relationship Partnership is the result of an agreement, which may be oral or written. Consequently persons not competent to contract (for example, minors) cannot form it.
ii. Plurality of persons Since partnership is the outcome of an agreement, the minimum number of Definition of Partnership commerce - - . . PM Advantages The main advantages of Partnership are given below: i.
Easy formation The formation of partnership firm requires fulfillment of lesser legal formalities than other types of organisation. What required is just an agreement, which can be oral or written. Registration of partnership is optional. Further, even if a firm wants to get itself registered, the registration process is very simple.
ii. Availability of larger resources The combined capital of all the partners and the greater borrowing capacity make available larger financial resources. New partners can also be taken into partnership to secure more capital. As a result, expansion of the business unit becomes feasible.
iii. Benefit of consultation Two heads are better than one. Wise decision can be possible when the issues and subject matters are thoroughly discussed. There is no place for hasty decisions.
iv. Division of Work and greater managerial efficiency The staggering load of management work can be judiciously distributed among the partners according to their experience, knowledge and taste. For example, one partner can look after purchases, another sales, yet another accounting etc. Thus when the burden is lightened, supervision by each partner over the allocated area of management becomes effective and efficient.
This ensures greater managerial efficiency. v. Reduced Risk The risk of each partner is reduced considerably since the loss sustained by the firm is shared by all the partners. vi.
Unlimited liability and credit standing The liability of a partner is unlimited. Since, apart from his business assets, even his private properties are also available for satisfying the claims of creditors. Hence, creditors may give more loans because they can get back the