Q.1 What is the Partnership Firm?
Partnership firm is an organization of two or more persons managed by anyone or all of them with intention to run business or industry and share the profits.
Q.2 What is the maximum and minimum number of persons to form a partnership firm?
There must be minimum of 2 persons to form a partnership firm. If the firm is intended for financial transactions maximum of 10 and for other purposes maximum of 20 persons can form a firm (See Sec.11 (2) of Company law).
Q.3 Should a partnership firm be registered?
Not necessarily. However, unless a partnership firm is registered with the registrar of firms and societies, the rights of the partners inter se or against strangers cannot be enforced in a court of law. If the partnership deed itself creates, transfers or affects an interest in immovable property.
Q.4 Is a partnership deed necessary to form a partnership firm?
No, it is not necessary. However, it is often prudent to make a partnership deed to produce to the bank, income tax authorities and to clients with whom the partnership firm deals with.
Q.5 Can a partnership firm be constituted for a particular business undertaking?
Yes. A person may become a partner with another for a single adventure or undertaking.
Q.6 What are the acts that all partners should give express consent to do?
Submitting a suit for arbitration, transfer of immovable property, acquisition of immovable property, withdrawal of suits is all forbidden except by the consent of all partners or by the usage of custom to the contrary.
Q.7 is the firm liable for the wrongful act of one partner?
Yes. The firm and all the partners are liable for the wrongful act or fraud which causes loss or injury to any third parties.
Q.8 Does the death of a partner dissolve the partnership firm?
Yes. The death of a partner automatically dissolves the partnership firm. It is however usual for the partnership deed to provide beforehand that the firm should continue in spite of death, retirement or insolvency of a partner.
Q.9 What is a partnership at will?
When the partnership deed does not contain any provision for the duration of the partnership nor conditions for the termination of partnership, it is a partnership at will.
Q.10 What is the legal status of partnership property?
Any property can be treated as the property of the firm by simply showing it as such in the book of accounts. This would constitute partnership property and all partners are joint owners of the partnership property as increased or decreased by profits in the course of business. Property belonging to an individual partner does not become the firm’s property simply by being used for the purpose of the partnership.