There are four kinds of partnership:
1. General partnership:
In a general partnership, the liability of each partner is unlimited. It means that the firm’s creditors can realise their dues in full from any of the partners by attaching their personal property if the firm’s assets are found to be inadequate to pay off its debts.
An exception is made in the case of a minor partner whose liability is limited to the amount of his share in the capital and profits of the firm. In India, all partnership firms are general partnerships.
Each partner of a general partnership is entitled to take active part in the management of the firm, unless otherwise decided by the other partners.
2. Limited partnership:
A limited partnership is a partnership consisting of some partners whose liability is limited to the amount of capital contributed by each. The personal property of a limited partner is not liable for the firm’s debts.
He cannot take part in the management of the firm. His retirement, insolvency, lunacy or death does not cause dissolution of the firm. There is at least one partner having unlimited liability. A limited partnership must be registered.
3. Partnership at will:
It is a partnership formed for an indefinite period. The time period or the purpose of the firm is not mentioned at the time of its formation. It can continue for any length of time depending upon the will of the partners.
It can be dissolved by any partner by giving a notice to the other partners of his desire to quit the firm.
4. 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 for which it was formed.