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A partnership is an unincorporated association, where two or more persons associate for the purposes of
business. No other separate legal personality is brought into existence on the formation of the
partnership, and the business and all its assets remain the property of the partners.
The Partnership Act 1890 de"nes a partnership as ‘[t]he relation which subsists between persons
carrying on a business in common with a view of pro"t’. Partnerships can be formed by deed or quite
informally and, in contrast to companies, can be formed simply in writing, orally or even by conduct. It is
normal, however, to have a partnership agreement which sets out the terms on which the partners are
associated. In the absence of any agreement to the contrary, when one partner wishes to leave or retire,
the partnership has to be dissolved and then perhaps re-formed among remaining partners.
Furthermore, when a new partner wishes to join, there has to be unanimous consent of the existing
partners.
There are four types of partners: General Partner who is actively involved in the day to day operations of
the business; Sleeping Partner who in not involved in the operation of the business; Limited Partner who
is only liable for the capital he injected into the business as long as he does not take part in the
management of the business and; the Salaried Partner who receives a salary but does not have a say in
the running of the business.
Characteristics of a partnership include:
i. Unlimited liability of the partners
ii. The number of partners are limited
iii. The assets of the partnership are jointly owned
