All the above elements must coexist in order to constitute a partnership. If any of these is not Present, there cannot be a partnership. We now discus these elements one by one:
- Contract: A ‘contract’ is the very foundation of partnership. It may, however, be either express or implied, Again, it may be oral or in writing.
- Association of two or more persons: Since partnership is the result of a contract, at least two persons are necessary to constitute a partnership. Only persons competent to contract can enter into a contract of partnership, Persons may be natural or artificial. A company may, being an artificial legal person, enter into a contract of partnership, if authorized by its Memorandum of Association to do–so,
- Carrying on of business: The third essential element of a partnership is that the parties must have agreed to carry on a business. The term ‘business’ is used in its widest sense and includes every trade, occupation or profession.
- Sharing of profits: This essential element of provides that the agreement to carry on business
must be with the object of sharing profits amongst all the Impliedly the partnership must aim to make profits because then only profits may be divided amongst the partners.
- Mutual agency: The fifth element in the definition of a partnership provides that the business must be carried on by all the partners or any (one or more) of them acting for all, that is, there must be mutual agency.