Nature of Partnership Video Lecture - Commerce

so let's get on with the definition what
is partnership now what comes to your
mind when I utter this word partnership
you know normally people say partnership
you know there's an agreement between
two people others say partnership means
sharing of profits you know some might
say partnership is the understanding
between two people or three people you
know it depends how many people are
involved so it may be two three four
eight ten people so these are the
answers that you know you normally get
when you ask this question what is
partnership this is corrected
partnership is an agreement between
people this is correct that partnership
means sharing of profits of the business
this is correct
that partnership is an understanding
between the people it is a deal amongst
the people but let us see how
partnership has been defined as per the
Indian Partnership Act 1932 let us try
to understand what a partnership is with
the help of some examples now I have
drafted a few examples for you what I
would request you is as in when a new
example comes before you please write it
down on a paper keep a paper and pencil
or pen ready with you mark the example
and against it right yes or no yes if it
is a partnership no if you think it is
not a partnership so let's see those
examples the first example is a and B
are joint owners of house which is given
on a rent of ten thousand per month
which is shared by both of them so there
is a house which is owned by a and B
jointly they have given that house on
and of rupees 10,000 Pearlman and they
equally share that then that is a keeps
5,000 D keeps 5,000 so what do you think
is this partnership
whatever you think write it down on the
piece of paper next a B and C are
members of H of F which is into the
business of textiles the profit is
shared equally by all the member that is
a BNC is this a partnership alone it's
for you to answer okay let's see next a
of Pune has appointed B of Jaipur to
sell his goods in jeopardy we're in the
profit will be distributed in the ratio
to is to 1 now there is a person a who
resides in Pune now he wants to affect
sales in Jaipur so he has appointed B
who resides in Jaipur so that he can
sell the goods in Jaipur now whatever
the profit B makes by selling the goods
in Jaipur it will be distributed in the
ratio to is to 1 amongst a India is this
a partnership both a B and C run a CA
form wherein a takes care of audit
matters V takes care of tax matters and
C takes care of the Nantz matters
whatever the profit the form gets it is
shared equally by all three of them now
is this a partnership now if you want to
again go through the questions pause the
video here go through all the questions
again and then proceed because we have
some more examples coming
so if you are not done with the answers
pause the video you next a and B run a
recreation house for elderly people on
subscription basis this subscription is
utilized for getting in more equipment
for the creation activities and getting
of giving better facilities to the
members a and B run a recreation house
for elderly people and they take
subscription for this now with the
subscription they purchase better
equipment they give better facilities
you know to the members is this a
partnership I don't know
next a owns a Jeep and B drives it on
commercial basis the income after
deducting the expenses is shared by them
equally is this a partnership next a and
B owns a plot of land on which they have
constructed a Gurudwara whatever
donations are receive are utilized for
conducting Lunger services for poor is
this a partnership you've got to the
same next a and B are in the business of
manufacturing and selling shoes the
profit is shared in the ratio 3 is to 1
however I shall bear all the losses is
this a partnership you write down the
answers for all the 8 examples you know
we come back to these answers after
understanding what this partnership as
per the Indian Partnership Act 1932 so
let us now understand how partnership
has been defined in the act once we
understand that we come back to these
answers and
check how many of our answers are
correct so students who want to go
through the patience again pause your
video here go through the questions and
write the answers before getting on with
the video
so moving on definition of partnership
now this definition is given under
Section four
how is partnership defined partnership
is the relation between the persons who
have agreed to share the profits of a
business carried on by all or any of
them acting for all now this definition
you know it might sound that you heard
this definition before this definition
must be now looking very familiar the
reason is because you would have covered
it in you know in your lower standards
in eleventh and twelfth class normally
partnership definition is taught there
the definition is taken from the Indian
Partnership Act 1932 you possibly I
don't know if you know it or no but this
definition is taking from this act and
what is the definition the definition
says partnership is the relation between
the persons so the two important words
in the first line are the relation
between the person's relation and
persons so there is a definite relation
that exists now this relation exists
between person so we can see that there
is the plural that means you need at
least two people you need at least two
people to start apartment analysis very
basic in regards to partnership
one person cannot start a partnership
with whom will he partner partner you
know means that you have somebody to
partner you somebody with you to help
you out somebody to share responsibility
and if he's sharing responsibility we
share the remuneration the profit the
benefit also partnership cannot be alone
what is alone becomes sole
proprietorship so partnership cannot be
done by one person it has to be done by
two or more persons so you need at least
two people partnership is a relation
between persons who have agreed who have
agreed that means there is an agreement
between these two people there exists an
agreement they have agreed on something
what they have agreed on let us study to
share the profit that means there is
profit sharing they have agreed on
sharing the profits of the business
obviously when you will have a business
only then you can have the profits you
cannot have profit without a business so
when you agree to share the profits that
means you agree to do a business so that
means there is an existence of business
as well okay which is carried on by all
that means all the partners all the
persons who have agreed to share the
profits of the business are conducting
that business all are engaged in
conducting the business every person is
doing some or the other duty
some or the other function of the
business you know maybe sales maybe
marketing the production maybe purchase
maybe procurement maybe Finance accounts
maybe anything you know all the partners
are engaged in that business or any of
them acting for all or any of them that
means if there are let's say three
partners any of them if not all if all
the three are conducting the business
that they'll be covered by this point
but let's say only two are doing the
business one has only invested capital
then two persons two partners are there
in that business which are actively
doing the business so we can say any of
them acting for also these two are
acting for all the three as simple as
that one in person is not at all doing
the business he's not engaged in any
activities of the business he is not
conducting it so that the meaning two
who are doing it they are doing it on
the Third's behalf also so these two are
representing all the three of them so
any of them acting for all only if let's
say one person is conducting the
business you know there's one person
who's you know given his brand to the
business this another person who's
invested capital in the business and
there's this third person will be doing
the business now the first two persons
are not engaged in the business they
will not conduct the business it's only
the third person who is engaged who's
doing who's conducting the business can
I say
is covered by this last line or any of
them acting for all now this any means
it may be one it may be do it maybe
three maybe put any number acting for
all so if there are eight people who are
doing the business if seven conduct the
business they will be covered by the
last line if six conduct the business
they'll they'll be covered by the last
line if five four three two people
conduct the business will be covered by
the last line and if only one person is
conducting the business on behalf of
everybody he will again be covered by
the last line but if all do the business
they will be covered by the second last
line because there it is written carried
on by all or any of them acting for all
so here in the last line the people the
persons the partners who are carrying on
the business have the ability to do it
on the others behalf as well and because
of this reason they also have the
ability of binding their act onto the
others
so if only one out of the three is you
know doing the business whatever
actually be doing read purchase beat
sales bees beat service you know beat
negotiation whatever acts he will be
doing you will be doing it on the behalf
of the other two as well as he has the
ability to bind those two persons also
he'll have the ability to bind those two
persons also that means if he has taken
loans now this means he has taken loan
on the behalf of all three of them
though only he has taken the loan but
this means all three of them are now
bound by hit so he has the ability to
bind the others as well
so this is how the definition of
partnership is defined so for this there
is one jargon that we say it's mutual
agency now why this is called as mutual
agency is because every partner acts as
the agent of other partner so there is a
mutual agency that exists between them
because he can bind the other partners
by his act and this is what exactly an
agent does he binds the principle by his
act so there we can see exist a mutual
agency if there are three people let's
say a B and C a is the agent of be a
becomes the agent of C as well at the
same time D becomes the agent of a and B
also becomes the agent of C at the very
same time see also becomes the agent of
a and B so you can see that one partner
is the agent of all the other partners
and all the other partners are also his
agents so everybody is and everybody is
agent that means everybody is
everybody's principal also we get into
the depth of this word mutual agency
later on but for now please understand
you know all the partners are agents of
you know the other partner one partner
and that partner is the agent of all the
other apartments so this is the mutual
agency that exists between them because
one partner can find Kolob deform by his
act so he becomes the agent of the form
so with this the definition is clear
let's go and understand the features of
partnership