Law of Partnership – The Partnership Law

In law, a partnership is not a charitable organization or a social club. The partnership is therefore expected to make a profit which is to be shared according to the laid down regulation.

Partnership Law

Section 1 of the partnership act states that “Partnership is the relation which subsists between persons carrying on a business in common with the view of making profits”.

A clear breakdown of the three (3) key points in the definition are as follows;

  • A partnership involves relations between persons.
  • They must be carrying on a business in common.
  • It must be carried out with a view to making a profit.

From the foregoing and based on partnership law, it is obvious that partnership cannot be formed by a single person.

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Section 19 CAMA [companies and allied matters act] 1990 States that the number of persons that can form a partnership is twenty (20) while that of banking business is between two to ten (2–10)

According to professor Orojo… “It is the carrying-on of the business which is the test of partnership, not a mere agreement”


IN KEITH vs. MANSELL, two persons started preparation to form a company and goods were ordered in the name of the intended company. The court held that it was not binding on the company since they were only preparing to operate as partners.

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In law, a partnership is not a charitable organization or a social club. The partnership is therefore expected to make a profit which is to be shared according to the laid down regulation.


IN OGINI Vs OGINI, a member of the musical band left the group and sued for dissolution of what he claimed to be a partnership between him and others. The court held that the evidence did not reveal a partnership but rather a scheme under which musicians owned instrument jointly.

Formation of Partnership

To create a partnership, it is required that the characteristics of a contract must be present. This shows that partnership cannot be formed under duress and a partnership must pursue a lawful object.

Formalities For Partnership

There is no particular format under the law as regards the formation, it can be formed orally, written or even through their conduct. Although the oral partnership is legally binding on parties. Parties normally enter into a written agreement called “DEED OF ARTICLE OF PARTNERSHIP”.

If a partnership is illegal, the partners cannot enforce their rights against each other in the court.


A person of unsound mind is bound by partnership agreement unless he can show that he did not understand what he was doing when he entered into the partnership and the other party or parties were aware of his condition.

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Types of Partnership

  • GENERAL PARTNERSHIP: There is a room for someone who does not want to participate fully, he’s a sleeping partner but his liability is not affected by the fact that he is sleeping.
  • CORPORATE PARTNERSHIP: It is made up of two or more cooperation where there is a partnership between two or more partnerships.

Partnership Agreement

The essential attributes of a valid partnership agreement must show the following;

  • The name of the business.
  • Who the parties are.
  • Capital to be contributed by the partners.
  • How new partners are introduced.
  • Sharing of profit and loss.
  • Management of the firm.
  • Accounts and records of the firm.
  • Duration and dissolution of the partnership.

Duties of Partners

A partnership relationship is a contract which is based on confident, good faith and trust between the parties, there is, therefore a general duty on all partners to act honestly in all transactions involving the firm. The duties under the partnership law are;

  • No secret profit must be made from all transaction made on behalf of the firm.
  • A partner is not allowed to engage in a competing business to that of the partnership without the consent of his colleagues.
  • Partners must give full information to each other on all matters affecting the firm.
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Dissolution of a Partnership

  • Expiration of time.
  • The death or bankruptcy of a partner.
  • If the partnership is illegal.
  • Where the partnership is formed for a specific undertaking, upon completion, the partnership stands dissolved.

However, the court may order the dissolution of a partnership if a partner;

  • Becomes insane or of unsound mind.
  • Is not capable to participate perhaps as a result of illness or accident.
  • Behaves in such a way as to jeopardize the business.
  • Misconducts himself so that the partnership business will be affected.
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