Partnership is defined as a relation between persons who have agreed to share the profits and losses of a business carried on by all of them or any of them acting for all, on a pre agreed profit sharing ratio. The main types of partnerships are general partnership, limited partnership and Joint venture. General Partnership is a partnership in which all the partners share equal responsibilities and liabilities in the partnership firm/company. The main characteristic of general partnership is the unlimited liability of the partners. Each partner is personally liable for the debts of the partnership , as well as all the contracts entered into by other partners Limited partnership similar to general partnership, but it is made up of 1 or more general partners and 1 or more limited partners. The main characteristics of limited partnership are :- * It contains both general and limited partners.
* The liability of the limited partners is limited to their capital contribution while those of the general partners will be unlimited. * General partners manage the business and acts as an agent of the partnership, while limited partners cannot manage the business. * Partnership is automatically dissolved if a general partner is withdrawn from the partnership whereas withdrawal of a limted partner doesn’t automatically dissolve the partnership. Joint Venture is a business agreement or association between two or more parties for a finite period and for a specific purpose. The main characteristics of a Joint Venture are :- * They are mainly formed for a single business and for a limited period, rather than a long term relationship. * Normally all the parties involved in the joint venture are expected to contribute skills together with money. * The agreement between the parties involved are regulated by a “ Joint Venture Agreement”.
In a partnership, the agreement can be written or oral. But its always advisable to be have a written agreement...
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