When Partnership Business become Illegal?

When Partnership Business become Illegal?

When Partnership Business become Illegal-

When two or more persons agreed to form a business and run by them with a view to earning a profit is called partnership business.

The partnership becomes illegal in the following circumstances:

  • When the numbers of partners are reduced and become less than two. And Partners are not individually liable for business debts
  • When the maximum number exceeds the prescribed limit as per act. That means maximum 20 in general partnership and 10 in banking case.
  • Limited life of a partnership, if one partner leaves the partnership can end.
  • When all partners except one have been declared insolvent.
  • Shared decision making means you do not have full control, which could lead to disagreements or paralysis of the partnership.
  • When the business is established for some illegal purpose. Also, oral partnerships can lead to disputes among owners.
  • When the trade is declared illegal by the court of law.

Share This Post