Monday, March 29, 2010

TYPES OF PARTNERSHIP

Partnerships may be divided into two kinds:
(1) General partnership, and
(2) Limited partnerships.

(1) General Partnership : The liability of partners is unlimited in general partnership. All the partners personally and collectively are liable for the obligations of the firm. All partners have equal rights and all of them can participate in management. General partnership are of the following kinds:
(a) Partnership at Will : This type of partnership continues up to the time partners have faith in each other. It is dissolved when all partners wants dissolution or any of the partners given notice for dissolution of the firm. The duration of the firm is not fixed beforehand.

(b) Particular Partnership : If a partnership is established for a definite work or a definite period, it is known as a particular partnership. It is of two kinds: (1) Fixed Work Partnership – This type of partnership is started to complete a fixed work. After the completion of work the partnership dissolves. (2) Fixed Term Partnership – This type of partnership is established for definite period. The partnership dissolves with the termination of period.


(2) Limited Partnership : If in a partnership, the liability of one or more partners is limited to the amount of capital invested by them, it is known as limited partnership. In such a firm at least one partner must have unlimited liability. So in limited partnership the liability of some partners is limited while liability of some partners is unlimited. The partners with limited liability are called special partners and they cannot participate in management. They can make suggestions only.

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