Partnership may be divided into two classes on the basis of the liability of the partners.
A) General Partnership or Unlimited Partnership
B) Limited Partnership.
A. General Partnership:
A partnership in which the liabilities of all the partners are unlimited is called as general partnership. This kind of partnership may be further divided into two kinds on the basis of duration of the firm.
(i) Particular Partnership:
A partnership formed for particular period or for a particular business is called “Particular Partnership”. Such a partnership comes to an end after the expiry of the particular period or after the completion of the particular business.
(ii) Partnership at will:
Partnership formed for an indefinite period is called as “Partnership at will”. Any partner can terminate the partnership according to his will, by giving a 14 days’ notice to other partners, of his intention to do so.
B. Limited Partnership:
A partnership which has one or more limited partners (i.e., partners with limited liability) in addition to one or more general -partners (i.e., partners with unlimited liability) is called limited partnership. Here, the limited partners are also termed as ‘special partners’. Their liability is limited to the extent of capital contributed by them.