A partnership is the contract relation subsisting between persons who have combined their property, labor or skill in a lawful enterprise or business for their common profit. The partners make up the firm which is commonly held to be an entity the same as a corporation, though the law generally regards the partners as joint owners of the firm property.
A general partnership is one in which the parties thereto agree to enter into a specified business, no limitations or conditions being fixed. A special or limited partnership is one in which there may be general partners with unlimited liability and special partners whose liability is limited upon the compliance with certain requirements.
An ostensible partner is one who Is known to the world as such. A secret partner is one who is not openly or generally so declared. He is not liable for debts contracted after his retirement, although he has given no notice of the same. A dormant or silent partner is one who takes no part in the transaction or control of the business, but shares in the profits and losses according to certain agreements. A nominal partner is held out to the world as such without actually participating in the profits and losses of the business.
All persons who are legally competent to do business for themselves may enter into partnership which may be formed by a mere verbal agreement and stand in law, but a written agreement is the one to be preferred. The parties may agree as they please as to sharing profits or losses, but in the absence of writing to prove the contrary the law will assume that partners share profits and losses equally. The articles of agreement should be drawn up with special care in writing the details of conditions, liabilities and proportionate share of profits or loss fully stated.
It is presumed that a partnership commenced at the time the articles of copartnership are drawn unless otherwise stated.
When a partner withdraws from a firm, but allows his name to be used as before, or if one lends his name to a firm, in either case he is held responsible to third persons as a partner.
It is generally supposed that one partner cannot sue another. This is not wholly true. A partner can sue for a balance due him after settlement of general accounts or for a balance due him on some specific account. It is, however, best to appeal to a court of equity, for that court can do for partnership what the law cannot do.