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Graded Discussion Board

Business & Labour Law (MGT611)


Dear Students!

This is to inform that Graded Discussion Board (GDB) No. 02 will be opened on July 31, 2015 for discussion and last date for posting your discussion will be August 04, 2015.

Topic/Area for Discussion

 “Law relating to Companies”

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Replies to This Discussion

Topic: Partnership Formation!

Ahmad has accumulated savings of Rs.10 million. He intends to start a business other than the form of sole-proprietorship. One of his friends has suggested him to start business by joining hands with other persons of mutual understanding as a partnership firm. As a student of business law, how will you motivate Ahmad about the most convincing features of Partnership as per the Partnership Act 1932?

Note: Your discussion should be precise and to the point. Based on the nature of question asked in this GDB, it is preferred to paste your discussion in bullets.

Advantages of Partnership

  • Capital – Due to the nature of the business, the partners will fund the business with start up capital. This means that the more partners there are, the more money they can put into the business, which will allow better flexibility and more potential for growth. It also means more potential profit, which will be equally shared between the partners.
  • Flexibility – A partnership is generally easier to form, manage and run. They are less strictly regulated than companies, in terms of the laws governing the formation and because the partners have the only say in the way the business is run (without interference by shareholders) they are far more flexible in terms of management, as long as all the partners can agree.
  • Shared Responsibility – Partners can share the responsibility of the running of the business. This will allow them to make the most of their abilities. Rather than splitting the management and taking an equal share of each business task, they might well split the work according to their skills. So if one partner is good with figures, they might deal with the book keeping and accounts, while the other partner might have a flare for sales and therefore be the main sales person for the business.
  • Decision Making – Partners share the decision making and can help each other out when they need to. More partners means more brains that can be picked for business ideas and for the solving of problems that the business encounters.

According to the partnership Act 1932, we may motivate Ahmad about partnership with respect to below features:

1)      Right of Transaction:


All the partners can jointly make the dealing with the bank but normally they make a representative among them for making transaction with the bank. This authority is written in nature and copy of this document provided to bank. This authority is included powers to draw, indorse, acceptance of bills, mortgage and selling of property belongs to the firm.


2)      Responsibility of Loan:


If firm takes a loan from bank then responsibility of repayment of loan is on all the partners. All partners will equally share the profit & loss of the company.


3)      Retirement of partner:


If one or more than one partner of partnership firm is retired then they will not responsible for such transaction which will be make after their retirement.


4)      Death of partner:


The death of partner dissolves the firm. If the account has a credit balance then the operation on the account will not be stop by the mutual understanding of all the partners.



The business secrecy remains within partners. This factor is very helpful for successful operation of the business. This partnership business have also tax facility so, Every partner pays tax individually. So, a firm is in a better position as compared to Joint Stock Company. Work’s burden is not only on one person


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