A partnership is formed as a result of an agreement among the interested persons. It may be an oral or a written agreement. The law does not lay down any formalities for the creation of partnership. However, all the essential elements of a valid contract must be present.
But the following two points have to be taken into consideration:
- Competency of partners: If a partnership arises from an agreement, it can be formed only by the person who is competent to contract. But a minor may be admitted to the benefits of partnership with the consent of all the other partners.
- Consideration: A partnership is an extension of the law of agency. Partners are mutual agents. Since no consideration is required to create an agency (Sec. 185 of The Indian Contract Act), no consideration is required to create a partnership.