TeachMeFinance.com - explain Partnership
partnership -- a form of business organization in which two or more persons join in a business or commercial enterprise, sharing profits, risks and losses according to the terms set forth in their partnership contract.
Partnership -- An unincorporated business owned and operated by two or more persons, who, according to the agreement of the partnership, share the profits and the losses, and the responsibilities, and have general or limited liability. (At least one partner must have unlimited liability)
Partnership -- Joint interest, with an agreement to share the profit and bear the loss in certain proportions. If one of two partners contributes the greater part or the whole of the capital he is not entitled to interest on his capital or on the excess unless there is an express agreement allowing him interest. In the absence of an agreement it is assumed that the other partner's contribution of time or skill or both was regarded in the understanding between the partners as equalizing the disproportion of capital. If there is to be any compensation outside of a division of the profits it must be provided for in the partnership agreement. If the capital of a firm is impaired or wholly lost the deficit must be repaid like a loss of any other kind. There is no distinction between an impairment of capital and any other loss and the agreement for sharing losses applies and obtains. A loss is equally a loss whether it is a loss of capital or of gains previously made. A partnership is not liable for a private debt of any of its members, but any member's interest in the property of the firm may be levied upon. The usual procedure is to sue the individual debtor and secure judgment against him ; execution is then levied upon his individual property and if this is not sufficient to satisfy the judgment his interest in the partnership property may be levied upon and sold. The individual insolvency of a partner when determined by bankruptcy proceedings or acknowledged by an assignment for the benefit of his creditors effects an immediate dissolution of the firm. A partner may be actually insolvent, that is, unable to pay his debts, and the firm still may continue. But if he makes an assignment for the benefit of his creditors or if his bankruptcy is decreed the immediate dissolution of the firm becomes necessary in order that the share in it of the insolvent may be ascertained and separated from the shares of the others and placed at the disposition of his creditors. If a partnership is continued beyond the time originally fixed and no new terms are agreed upon it becomes a continued partnership. Any partner may then declare the firm dissolved whenever he chooses. The continued partnership, however, is presumed to be upon the same terms and conditions, so far as these are applicable, as those which obtained before the expiration of the fixed term. A clause requiring a partner who wishes to retire to notify the others at some definite time beforehand is no longer in force, because such an arrangement is incompatible with a partnership at will. When one of two partners dies the partnership is immediately dissolved unless there is a provision in the partnership agreement to the contrary.
About the author
Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.