Partnership -

A partnership exists wherever two or more persons combine their labor or capital, or both, to secure the profits to be produced thereby. The terms upon which this is to be effected are regulated by agreement between the parties and are generally, although not necessarily, expressed in a written instrument called "Articles of partnership."

Partners are agents for each other, and any one may bind the firm in transactions within the scope of the firm's business, and each one, whether he be known to the world or not, as in the case of a "dormant" partner, is individually liable for the firm's debts. That one who shares in the profits of a business must share in its losses, is a general principle. No arrangements among the partners themselves can alter these facts to the prejudice of third parties, hence no one should enter a partnership without reflecting that he commits the whole of his fortune to the integrity and intelligence of his associates. On the other hand, any person dealing with a partner in any matter within the scope of the firm's business, knows that he has the security not only of the firm's property, but also of the property of the individual partners.

Although it is a general rule that only those who share in the firm's profits can be held liable as partners, one without share may be made liable by allowing his name to be used or himself to be held out to the world as a partner, so it is essential that one retiring from a firm should not only advertise the dissolution in the newspapers, but should also send special notice of his retirement, by circular, to all persons who have been in the habit of dealing with the firm.

There are statutes in a majority of states which enable persons to contribute money loans or personal property as "special" partners, and limit their liability to their actual contribution. This is often called a "limited partnership" and the firm name announces it as "Brown & Smith, Limited." Legal advice is most important in entering into any such relation.

Arround Partnership in The Grocer's Encyclopedia


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