VATDSAG04050 - Single Entity and Partnerships: what is a partnership?
A partnership is defined in the Partnership Act 1890, section 1(1) as 鈥榯he relation which subsists between persons carrying on a business in common with a view to profit鈥�. For the purposes of the Partnership Act 1890, persons acting in partnership are collectively called 鈥榓 firm鈥�. The terms 鈥榩artnership鈥� and 鈥榝irm鈥� are, to all intents and purposes, interchangeable.
A partnership is an unincorporated association in which the agreement between the parties is such that the relationship between
- themselves, and
- themselves and third parties
is governed by the Partnership Act.
Individual partners may be corporate bodies but the partnership itself will not be incorporated.
The existence of a partnership is a matter of fact. Generally speaking, the essential elements of a partnership are:
- there must be a business
- the business must be carried on by two or more parties in common with a 鈥榲iew to a profit鈥�
- those parties share any net profits and losses arising from the business activities
- those parties individually have the power, by their words or actions, to legally bind the other members of the firm in relation to its transactions with third parties.