Chapter: 1.1 The Nature of Partnership of the Indian Partnership Act

The Nature of Partnership

In this context sections 4 & 7 are relevant.

Section 4: Definition of "Partnership", "Partner", "Firm" and "Firm Name"

As per Section 4 of the Act, "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for-all.

Persons who have entered into partnership with one another are called individually "partners" and collectively "a firm", and the name under which their business is carried on is called the "firm name".

Section 239 of the Indian Contract Act defined Partnership as follows:

"Partnership" is the relation which subsists between persons who have agreed to combine property, labour or skill in some business, and to share the profits thereof between them."

The definition of 'Partnership' in Section 4

Contains three elements
•    There must be an agreement entered into, by all the persons concerned;
•    The agreement must be to share the profits of a business; and
•    The business must be carried on by all or any of the person's concerned acting for all.

Section 7 - Partnership at will:

As per Section 7 "Partnership at will" is a partnership where no provision is made by contract between the partners for the duration of their partnership, or for determination of their partnership.