Limitations of Partnership Form of Business Organisation
Unlimited Liability:
Partners are jointly and individually responsible for the debts of the firm.
Personal property of partners can be used to pay business debts.
Uncertain Life:
Partnership has no separate legal existence.
It ends if any partner dies, becomes insolvent, becomes incapable, or retires.
Any partner can also dissolve the partnership by giving notice.
Limited Capital:
Maximum number of partners is restricted to 20.
Hence, the total capital available is limited.
Large-scale businesses cannot be easily started in this form.
Non-transferability of Share:
A partner cannot transfer or sell his share to an outsider without consent from all other partners.
This creates difficulty for a partner who wants to leave or sell his share.
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