The Indian partnership Act, 1932, defines a Partnership as The relationship between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’. An advantage of partnership is that not only do the partners get assistance from each other according to their ability and experience, but also a contribution towards the capital of the partnership, etc.
A financial partner pure and simple-i.e., one who invests his capital but does not take a working part in the business-may come in and help the firms financially, in a large way. Often a person who is possessed ef sufficient capital is not always experienced or trained in business and vice versa. Thus a combination of a man of experience and knowledge with one possessed of a capacity to afford financial help is workable to the best advantage.
The Partnership combination commands one great advantage over joint stock companies, viz, that here, each partner being personally interested in the fortunes of the firm, the incentive to work for the common benefit of all is the most active factor, one which is absent in the case of joint stock companies.