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Forms of Business Organisation — Business Studies STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceBusiness StudiesForms of Business Organisation4 Marks
Question
From the view point of liability and duration, how can you classify partnership?
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Answer

Partnership can be classified on the basis of two factors, viz., duration and liability.
  1. ON THE BASIS OF DURATION:
  • Partnership at Will: The time period or the purpose of this form of partnership is not mentioned at the time of its formation. It can continue for any length of time, depending upon the will of the partners.
  • Particular Partnership: It is a partnership formed for a specific time period or to achieve a specified objective. It is automatically dissolved on the expiry of the specified period or on the completion of the specific purpose.
  1. ON THE BASIS OF LIABILITY:
  • General Partnership: In this form of partnership, the liability of all the partners is unlimited. This is the traditional and most common form of business.
  • Limited Partnership: In limited partnership, the liability of at least one partner is unlimited, while other partners enjoy limited liability. This type of partnership was initially not identified in the Indian Partnership Act of 1932.
It gained recognition after the introduction of new Small Enterprise Policy in 1991. This policy allowed the formation of this partnership so that small entrepreneurs can raise capital from cautious investors.
  • Limited Liability Partnership (LLP): This form of partnership came into existence with the passing of Limited Liability Partnership (LLP) Act of 2008.
It is a corporate form of organisation that provides the benefits of limited liability and allows the partners the flexibility of organising internal structure as per the mutual agreement between them. The liability of each partner is limited to the capital contributed by them.

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