Reconstitution And Dissolution Of A Partnership

2027 words - 8 pages

Reconstitution and Dissolution of a partnershipAbstract:The paper aims to study using secondary research resources. That what are concepts of Partnership reconstitution and dissolution according to the partnership act 1932. Under what circumstances a partnership firm is entitled to these two concepts respectively, what are the rights, duties and liabilities of each of the partners involved under each case. And according to what modes can the accounts be settled among the partners upon the winding up of the business.Introduction"Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all (The Partnership Act 1932)Partnership' does not mean a body or association; it means a relationship between separate component persons. This is the kind of relationship that has to be followed for the betterment of business that they are jointly carrying out to full fill common interest of gaining profits from the business. There are three elements necessary for existence of a partnership: 1. the carrying on of a business.2. The business must be carried on in common. 3. The business must be carried on with a view to gain profits. (Nicholson, 2011).Essentials of partnershipAll individuals share the risks and rewards of the business.Each partner is entitled to share the net profits of the business.Partners are jointly and severally responsible for all the debts and obligations of the business without any limit, including loss and damagesPartners have equal rights to make decisions.All individuals share the ownership of the assets of the business. (Taylor, 2011)These all have to follow for a legal partnership to be present. In any one of them is missing than there will no partnership.History of partnershipPartnership law is as old as commerce itself. Thought started since 15th century when merchants from the Italian cities were brought to northern Europe the foundations of law. In 16th century 'Italian Law Merchant was made for a business to be carried out. Firstly there were two principal forms of partnership. The first was the Commenda, whereby an investor, the Commendator, evaded the usury laws by putting money into a business in return for a share in the profit gained by the business carried out, but was liable for no more than his investment that he initially invested. It is also known as limited partnership. The other was the Societas, or ordinary partnership, in which all members were equally bound and responsible for the debts and could bind the firm. So now the principles were known. Later on statutes of 1865, 1890 and 1907 came for a clear view of partnership relationship. The Law of Partnership Act 1865, 'Bovill's Act' was passed to undo the assumption that the existence of some payments from the profits of a business would comprise the recipient a partner or liable as such for the debts of the business. Later it was known as Limited Partnership Act. The Partnership Act...

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