The website has the complete lesson note for all the subjects in secondary school but this piece showcases the SS1 Commerce Lesson Note on Formation and Agreement of Partnership Business. You can use the website search button to filter out the subject of interest to you.
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FORMATION AND AGREEMENT OF PARTNERSHIP BUSINESS.
A partnership business may be established without any formality although the partners have certain unavoidable obligations to third parties. It is usual for people entering into partnership to express their intention in a partnership agreement known as, deed of partnership.
Deed of Partnership
This is a document which contains the rules and regulations which partners agree to abide by in the course of the operation of the partnership. The deed is also called Partnership law. The contents of partnership deed are:
- The name of the partners
- The name and nature of business.
- The objective of the firm
- Admission of new partners
- Procedure in the event of death of a member
- The amount of capital contributed by each partner.
- The role of each partner in the firm
- How profits and losses are to be shared.
- Whether or not salaries are to be paid to any partners and how much.
- How decisions are to be made either by majority vote or what
- The duration of the partnership
- The rights and obligations of partners
- How the business shall wind up if the need arises.
NOTE: partnership is formed on agreement among the partners.
RIGHTS OF PARTNERS
- The partners are entitled to share from the profits of the partnership business.
- They must be indemnified by the firm in respect of payments made and personal liabilities incurred in the conduct of the business
- A partner making advance beyond the amount of capital which he has agreed to subscribe is entitled to interest of 5%.
- A partner has the right to act as the agent of the business.
- Every partner must have access to the partnership books of accounts.
- Every general partner can take part in the management of the partnership.
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