Test of Partnership
The all elements of Partnership must co-exist in order to constitute partnership Sec 6 of Indian Partnership Act provides that “in determining whether a group of persons is or is not a firm or whether a person is or in not a partner in a firm, regard shall be had to the real relation between the parties, as shown by all relevant facts taken together “Thus all incidents of relations of the partnership are to be examined as shown in written agreement, verbal agreement or conduct. We can explain be position by the following examples.
(i) A&B jointly buy a mine and lease it out. They make a
partnership agreement that they will divide the lease rent in a ratio of 50:50 between themselves. In this case A&B are having understanding that they are partners but in the eyes of low it is not partnership.