Which Feature Of Partnership Binds All The Partners To The Agreement Signed By One Partner
Partnerships can be complex depending on the size of the activity and the number of partners involved. The creation of a partnership agreement is a necessity to reduce the potential for complexity or conflict between partners within this type of business structure. A partnership agreement is the legal document that determines how a business is managed and describes the relationship between the different partners. In Europe, partnerships contributed to the trade revolution that began in the 13th century. In the 15th century, the cities of The Hanseatic would strengthen each other; A ship from Hamburg to Gdansk would not only carry its own cargo, but it was also tasked with transporting cargo for other members of the league. This practice not only saved time and money, but also was a first step towards partnership. This ability to group together in reciprocal services has become a distinctive feature and a factor of long-term success of Hanseatic team spirit.  A partnership company may be dissolved at any time. This can be done voluntarily if all partners agree. Events such as the death or insolvency of a partner can also lead to the dissolution of the partnership company.
A partnership company may also be dissolved by the court. The intention of the partners is to make a profit through joint efforts. The profits made are shared by the partners under the agreed terms. Losses resulting from business transactions are also shared by partners. It is not necessary for the profit or loss to be shared on the basis of the capital taken into account by the partners. The rate of profit and loss participation between partners may differ from the capital participation rate, depending on the agreement between the partners. There is an agency relationship between all partners. The existence of the partnership is based solely on this agency relationship. The partnership`s activities can be carried out by all partners in common or by each of them on behalf of others. This means that each partner is an agent of all other partners in the company. The Income Tax Act of 1961 contains separate provisions for the calculation of income tax collected by the company.
It distinguishes the income of the business from the income of the partners. Partners bear the risks associated with running a business as a team. The reward comes in the form of gains shared by the partners in an agreed report. However, they also share losses in the same proportion when the business suffers losses. Partnerships recognized by a public body may benefit from special tax advantages. Among developed countries, for example, business partnerships are often preferred over companies in tax matters, as dividend taxes are levied only on profits before being distributed to partners. However, depending on the structure and competence of the company in which it operates, the owners of a company may be subject to greater personal liability than as a shareholder of a company. In these countries, partnerships are often regulated by antitrust laws in order to curb monopolistic practices and encourage competition in the open market.
However, the application of the legislation varies considerably. National partnerships, recognized by governments, generally also enjoy tax advantages.