An ideal partnership is a partnership which possesses all the requirements of a successful business. This can be possible only when all the partners are of high quality and they are chosen carefully.
It may be difficult in practice to find an ideal partnership. But the concept of ideal partnership acts as a guide in the formation and working of partnership firms. An ideal partnership must fulfil the following essential conditions:
1. Mutual trust and good faith:
Partners, who enjoy the good faith of each other, must be chosen. Initial goodwill often gives way to jealousy and destruct. Ideal partners are those who are not of an autocratic or secretive nature.
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A fairly long acquaintance is necessary between partners for mutual understanding and confidence. All partners must be honest and sincere and dedicated to the firm.
2. Supplementary contributions:
Partners should pool their resources in such a way that each complements the other. A proper balancing of skills and talents is required. Each partner should make a distinct contribution to the firm in terms of capital, business ability, technical ability, experience, widespread contacts or resourcefulness.
3. Common approach:
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All the partners must have common outlook and must act in coordination. Every partner must hold the interest of the firm supreme and should work for the common benefit. There should be compatibility of temperament among partners and a common approach to business problems.
There should be a spirit of co-operation and service on the part of all. For instance, a highly adventurous partner cannot go along with an extremely cautious person.
4. Written agreement:
The agreement of partnership should be in writing and signed by all the partners to avoid the possibility of misunderstanding and dispute among partners. The agreement should be comprehensive and precise in its details with regard to the mutual rights and obligations of the partners.
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5. Registration:
An ideal partnership should not suffer from any disadvantage. It should, therefore, be registered because an unregistered firm cannot enforce its rights against outsiders in the court of law.
6. Equitable adjustment of rights:
It is not necessary that every partner has equal rights in the profits and management of the firm but the right of each should be equitable having regard to his contributions to the firm. No partner should feel that he has been deprived of his just and due share.
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7. Competent management:
In an ideal partnership, control must lie in competent hands. All partners may be consulted but the final say should be given to those having experience and ability.
8. Proper size:
An ideal partnership should be large enough to have financial and managerial strength, but should not be unwieldy and unmanageable. Generally, the numbers of partners should not exceed five.
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9. Long duration:
Any medium scale business today requires a fairly long time to be successful. An ideal partnership should, therefore, be set up for a reasonably long period of time, so that there is stability or continuity of operations.
10. Adequate capital:
An ideal partnership should have sufficient financial resources for the long term and short term needs of business.