Association of two or more persons or entities that conduct a business for profit as co-owners. Except in the case of the limited liability partnership, which shares with the corporation the characteristic of being treated as a single entity whose members have limited personal liability, a partnership is traditionally viewed as an association of individuals rather than an entity with a separate and independent existence. A partnership cannot exist beyond the lives of the partners. The partners are taxed as individuals and are personally liable for torts and contractual obligations. Each is viewed as the agent of the others, and traditionally all are jointly and severally liable for the tortious acts of any partner.
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Partnerships may be formed .. in the legal forms of General Partnership (Offene Handelsgesellschaft, OHG) or Limited Partnership (Kommanditgesellschaft, KG). A partnership can be formed by 2 or more people.
In the OHG, all partners are fully liable for the partnership's debts, whereas in the KG there are general partners with unlimited liability and limited partners whose liability is restricted to their fixed contributions to the partnership. Although a partnership itself is not a legal entity, it may acquire rights and incur liabilities, acquire title to real estate and sue or be sued.
In mainland China, a partnership enterprise encompasses general partnerships and limited liability partnerships. A general partnership comprises general partners who bear joint and several liabilities for the debts of the partnership enterprise. A limited liability partnership enterprise includes general partners and limited partners where the limited partners are liable only to the extent of their capital contributions.
The Japanese civil code provides for partnerships by contract, which are commonly known as or "voluntary partnerships." A more recent statute has allowed for the creation of limited liability partnerships.
One form of partnership unique to Japan is the tokumei kumiai or "anonymous partnership," in which partners have limited liability so long as they remain anonymous in their capacity as partners and do not participate in the operation of the partnership. Japanese corporate law also provides for partnership-like corporations called mochibun kaisha.
There are two types of partners. General partners have an obligation of strict liability to third parties injured by the Partnership. General partners may have joint liability or joint and several liability depending upon circumstances. The liability of limited partners is limited to their investment in the partnership.
A silent partner is one who still shares in the profits and losses of the business, but who is uninvolved in its management, and/or whose association with the business is not publicly known.
A partnership in Hong Kong is a business entity formed by the Hong Kong Partnerships Ordinance, which defines a partnership as "the relation between persons carrying on a business in common with a view of profit" and is not a joint stock company or an incorporated company. If the business entity registers with the Registrar of Companies it takes the form of a limited partnership defined in the Limited Partnerships Ordinance. However, if this business entity fails to register with the Registrar of Companies, then it becomes a general partnership as a default.
Summarising s. 5 of the Partnership Act 1958 (Vic) (hereinafter the 'Act'), for a partnership in Australia to exist, four main criteria must be satisfied. They are:
A limited partnership in the United Kingdom consists of:
Limited partners may not:
If they do, they become liable for all the debts and obligations of the firm up to the amount drawn out or received back or incurred while taking part in the management, as the case may be.
According to section 4 of the Indian Partnership Act of 1932, "Partnership is defined as the relation between two or more persons who have agreed to share the profits of business run by all or any one of them acting for all". This definition superseded the previous definition given in section 239 of Indian Contract Act 1872 as - “Partnership is the relation which subsists between persons who have agreed to combine their property, labour, skill in some business, and to share the profits thereof between them”. The 1932 definition added the concept of mutual agency.
The federal government of the United States does not have specific statutory law governing the establishment of partnerships. Instead, the several composite states of the country each contain their own statutory and common law governance of partnerships. These states largely follow general common law principles of partnerships whether a general partnership, a limited partnership or a limited liability partnership. In the absence of applicable federal law, the National Conference of Commissioners on Uniform State Laws has issued non-binding models laws (called uniform act) in which to encourage the adoption of uniformity of partnership law into the states by their respective legislatures. This includes the Uniform Partnership Act and the Uniform Limited Partnership Act. Although the federal government does not have specific statutory law for establishing partnerships, it has an extensive and hyperdetailed statutory scheme for the taxation of partnerships in the Internal Revenue Code. The IRC is Title 26 of the United States Code wherein Subchapter K of Chapter 1 creates tax consequences of such great scale and scope that it effectively serves as a federal statutory scheme for governing partnerships.
The Qirad and Mudaraba institutions in Islamic law and economic jurisprudence were the precursors to the modern limited partnership. These were developed in the medieval Islamic world, when Islamic economics flourished and when early trading companies, big businesses, contracts, bills of exchange and long-distance international trade were established.
In medieval Italy, the Qirad and Mudaraba concepts were adapted in the 10th century as the commenda, a limited partnership instiution which was generally used for financing maritime trade.