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form of business has evolved in order to overcome some of the limitations of sole
trading concern like limited capital, limited managerial ability, unable to operate
large scale business, etc. Each person investing capital in a partnership firm is known
as a partner of the business. In this way, partner denotes to an individual whereas
partnership denotes a business formed collectively by the partners.

According to L.H. Haney, “Partnership is the relationship between persons
competent to make contract, who agree to carry on a lawful business in
common with a view to private gain.”

According to Nepal Partnership Act 2020, “Partnership is any business
registered in the books of Government of Nepal, which is carried by some
persons in one name sharing the profits with the mutual agreement to
participate all partners for each partner or a partners for all the partners in
business transactions.”

According to these definitions, there are the following essentials of partnership:
1. There should be more than one person to form partnership.
2. The persons concerned must combine to carry on business.
3. They must agree to share the profit of the business.
4. The partners carry out the business in the name of partnership firm.
5. The business must be carried on by all or any of them acting for all.
Types of Partnership

1. General Partnership
In general partnership, all the partners are allowed to participate in management
and are collectively liable to the obligations of the firm. All of them have unlimited
liability as well as equal rights.

a. Partnership at will: This partnership relies completely on the will of the
partners. Its life depends on the partners themselves. The firm terminates when
the partners have no faith in each other or if they mutually agree to dissolve the
firm.

b. Purposive partnership: Such partnership is established with a fixed purpose or
objective to be fulfilled or for a certain period of time. The firm automatically
dissolves when the objective of the firm is fulfilled or if the time has reached. It
has two types which are as follows:
i. Partnership for fixed term: This type of partnership is established for a
fixed period of time. As soon as the period is completed, the partnership
dissolves.
ii. Partnership for fixed work: This type of partnership is formed for
completing a certain work. Such partnership is automatically dissolved
after the completion of the work.

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