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Number of Persons

There should be at least two persons to form a partnership or a partnership firm. The maximum number of members that can exist in a partnership is 10 in the case of a firm carrying on a banking business and 20 in the case of any other business.

This restriction is placed by The Companies Act and not The Partnership Act.


The relations between partners are created by an agreement, that is, a partnership deed between two or more persons. An agreement from which a relationship of partnership arises may be expressed or implied. It may be oral or in writing.


A partnership can exist only where the group of persons is engaged in some business. Therefore, there can be no partnership where there is no intention to carry on the business. Business includes every trade, occupation and profession.

Sharing of Profits

There must be an agreement among all the partners to share the profits and losses of the business. They may share it in any way they like, that is, either equally or in any other ratio. However, it is not necessary that all partners must agree to share the losses. The partners may agree that one or more of them shall not be liable for losses.

Mutual Agency

Mutual agency relation means that the business of the partnership must be carried on by all the partners or by any partner acting for all the other partners. A partnership is, therefore, an extension of the principle of agency. Hence, each partner carries on the business as a principal as well as the agent on behalf of the other partners. A partner as an agent can bind other partners by his act and as a principal he can be held liable for the acts of the other partners.

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