The next series of posts will concern partnerships, how they are formed, what their implications are, and how you can protect your rights in a partnership.
The first thing you need to know is that there are no formal requirements to forming a partnership. You don’t need to have a specific agreement, or register the partnership for one to exist. The Partnership Act states that a partnership exists if two or more people carry on business with a view to making a profit. Therefore all a partnership requires is to have two or more people running a business, and the goal of the business should be to make a profit (as opposed to running a non-profit, or running a business together for cultural reasons or as a hobby).
There is no legal requirement for a partnership agreement, though having one is highly advisable so that all parties are on the same page as to their obligations and rights. In the absence of an agreement, the Partnership Act governs the relationship, though it does not provide for all possibilities and events that the partners might want to consider – for example, how do they add partners to the partnership or special conditions under which the partnership terminates.
So the first thing to remember about partnerships is that it is possible to form one without going through any formal steps. In fact, you may be in a partnership without intending to be in one, or without giving it a thought. In future posts, we will explore why you should be concerned about this, and what you can do to protect your interests.
Sapna Mahboobani is a business and technology lawyer and founder of Sapna Law. If you would like her to advice on your partnership or would like her to draft a partnership agreement for you, you may contact her at email@example.com or use the contact page on this blog.