You are currently viewing What is partnership? State its merits and demerits.

What is partnership? State its merits and demerits.

What is partnership? State its merits and demerits.


A partnership is a kind of business where a formal agreement between two or more people is made who agree to be the co-owners, distribute responsibilities for running an organization and share the income or losses that the business generates.

In India, all the aspects and functions of the partnership are administered under ‘The Indian Partnership Act 1932’. This specific law explains that partnership is an association between two or more individuals or parties who have accepted to share the profits generated from the business under the supervision of all the members or behalf of other members.


Advantages of Partnership:

  • Easy Formation – An agreement can be made oral or printed as an agreement to enter as a partner and establish a firm.
  • Large Resources – Unlike sole proprietor where every contribution is made by one person, in partnership, partners of the firm can contribute more capital and other resources as required.
  • Flexibility – The partners can initiate any changes if they think it is required to meet the desired result or change circumstances.
  • Sharing Risk – All loss incurred by the firm is equally distributed amongst each partner.
  • Combination of different skills – The partnership firm has the advantage of knowledge, skill, experience and talents of different partners.

Partnership Examples:

Few co-branding partnership examples are listed below:

  • Red Bull and GoPro
  • Spotify and Uber
  • Levi’s & Pinterest
  • Maruti Suzuki
  • Hindustan Petroleum

Leave a Reply