The partnership may be broadly divided into two kinds such as general partnership and limited partnership.
General or Ordinary Partnership:
The partnership arises from agreement among persons who share the profits of a business with joint and separate liability, the business being carried on by all the partners or any of them acting on behalf of others. The partnership may be carried on for an indefinite period or for a fixed time period or particular venture. Accordingly, the partnership may be of the following classes:
When the partnership agreement does not provide for the duration of partnership or the time period of its continuance, the partnership is regarded as Partnership-at-will. The partners are free to break their relationship at their sweet will. That at the will of a single partner a firm can be easily dissolved.
When the partnership is formed for a particular period or certain job or specific venture, it is called particular partnership. The partnership is automatically dissolved at the expiry of the fixed time period or on the completion of the tenure. When the partnership is continued after the expiry of the fixed time or completion of the particular venture, then it becomes partnership-at-will.
There are two types of partners namely general partner and limited partner. The liability of the limited or special partners is limited to the extent of their- capital contribution or an agreed sum. The special or limited partners cannot take active part in the management of the business. The limited partners’ acts also do not bind the firm. But he is entitled to inspect the books of the firm. The capital contributed by the limited part cannot be withdrawn and also cannot be transferred to an outsider without the consent of general partners. The firm is riot dissolved on the death, retirement, lunacy or bankruptcy a limited partner.