Unregistered Partnerships In India: A Critical Analysis Of Legal Framework, Judicial Approach, And Reform Proposals
- IJLLR Journal
- Jun 30
- 1 min read
M. Revanth Reddy, Symbiosis Law School, Hyderabad
Banoth Ashish Meera Naik, Symbiosis Law School, Hyderabad
PARTNERSHIP AND ITS SIGNIFICANCE IN BUSINESS
A partnership under the Indian Partnership Act, 1932 is defined as a business structure which involves the relationship between two individuals agreeing to share profits from a business carried on by all partners or any one acting on behalf of others. 1This voluntary business association has been foundational to the existence of India’s commercial ecosystem particularly for small and medium sized industries and service businesses like law or financial service farms. There must always be three prime elements which must mutually exist for any partnership to come into existence:
1. AN AGREEMENT
A partnership is fundamentally based on an agreement between two or more individuals, which can be either express or implied. This agreement is not merely a formality; it is the integral element of the partnership relationship and must reflect a mutual understanding and intention to collaborate in business. An oral or a written agreement, with a written document termed as Partnership Deed for establishing clarity regarding terms and conditions of the partnership, which stipulates rights, liabilities, ratios in profit-sharing among partners, as well as provisions for the admittance and withdrawal of partners are extremely important to avoid future civil litigation.
The partnership is born out of a contract rather than by status or blood relations. Thus, it differs from another form like a Hindu Undivided Family (HUF). The fact that this agreement is voluntary also goes to highlight that all partners should be willing parties to the terms agreed upon in the contract.
