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Chapter 6
Partnerships
Definition of partnership
A partnership is ‘the relation which subsists between persons carrying
on a business in common with a view of profit’ (s1 Partnership Act
1890).
A partnership can be a small operation or as with some large firms of
solicitors and accountants partnerships with several hundred partners.
Types of partners
General Actively involved in the day-to-day business.
partner
Sleeping Takes no active part in the running of the business. However, is jointly
partner and severally liable for the debts and contracts of the business.
Limited Contributes a specific amount of capital.
partner in a
limited Liability limited to that amount.
partnership
Cannot take part in the management of the firm.
Salaried Will received a fixed amount in income. Not a real partner unless he
partner also receives a share of the profits.
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