Partnership, as a form of business enterprise, came into existence on account of the severe limitations of sole proprietorship. Sole trader is an advanced version of proprietorship. It takes with adequate finance, managerial capacity and capability and scope for further expansion and growth because of single man show.
Expansions of business require more capital, increases the risks and managerial problems. It becomes difficult for the sole proprietor to handle these problems individually. It leads to the emergence of some kind of association among sole proprietors. This association is termed as a partnership form of organization.
Under section 4, “The relation between persons who have agreed to share profits of a business carried on by all over or any of them acting for all.” Indian Partnership Act, 1932.
“The relation existing between persons competent to make contracts, who agree to carry on a lawful business in common with a view to private gain.” Haney.
“Partnership has two or more member, each of whom is responsible for the obligation of the partnership. Each of the partner may bind the others and the assets of the partners may be taken or the debt of the partnerships.” William R.Spriegal.
“Two or more individuals may form a partnership by making a written or oral agreement that they will jointly assume full responsibility for the conduct of the business.” G.J.A. Shelbina.