The Most Important Feature Of A Partnership Agreement Is

However, every partner has the right, by law, to participate in the management. The agreement between the partners must consist in sharing the profits of the operation. There can be no partnership without the intention of mutual benefit. The profits must be distributed among the partners in an agreed proportion. There is an agency relationship between all partners. The existence of the partnership is based solely on this agency relationship. The activities of the partnership may be continued by all partners, jointly or by each of them, on behalf of others. This means that each partner is an agent of all the other partners in the firm. The finance or capital of the company is provided by the partners in the agreed shares. Skilled persons may be admitted in partnership without capital contribution. Although profit-sharing is apparent evidence of the existence of a partnership, it is not the indisputable test of it. It is also true that there can be no partnership without the company`s participation in profits, but profit sharing alone does not constitute a partnership.

A person may have a share of the profits of the partnership, but still cannot be a partner. The following examples can bring the point home. The main objective of the partnership is to make profits and distribute them among the partners. Any purpose other than that of the motive for profit cannot be described as a partnership whose purpose may be to serve society in one way or another. 4. Membership: there must be at least two people to form a partnership. . . .