This article will help you to differentiate between partnership and co-ownership.
Difference between Partnership and Co-Ownership
Partnership
1. Contract:
Partnership is the outcome of an agreement.
2. Number of Members:
ADVERTISEMENTS:
In partnership, the number of members cannot exceed the maximum limit.
3. Object:
The object of partnership is to carry on some lawful business and earn profits.
4. Agent:
ADVERTISEMENTS:
In partnership, there is an agency relationship between the partners. Every partner is the proprietor as well as the agent of the firm.
5. Transfer of Interest:
In partnership, no partner can transfer his share to anybody else without the consent of all the other partners.
6. Liability:
ADVERTISEMENTS:
In partnership, all the partners are liable jointly and severally for all debts and obligations of the firm to an unlimited extent.
7. Act:
Partnership is formed under Indian Partnership Act, 1932.
8. Division of Joint Property:
ADVERTISEMENTS:
In partnership, a partner cannot get the firm’s property divided in its existing state.
Co-Ownership
1. Contract:
Co-ownership may arise both by an agreement as well as by operation of law.
2. Number of Member:
ADVERTISEMENTS:
In co-ownership, there is no restriction on the number of members.
3. Object:
Co-ownership is not meant for business purposes.
4. Agent:
ADVERTISEMENTS:
In co-ownership, no agency relationship exists between the co-owners. Every co- owner is responsible for his own acts only.
5. Transfer of Interest:
In co-ownership, a co-owner may transfer his interest to the third party and break co-ownership at his will without the consent of all the other co-owners.
6. Liability:
ADVERTISEMENTS:
In co-ownership, there is no question of unlimited liability.
7. Act:
There is no such act governing co-ownership.
8. Division of Joint Property:
In co-ownership, a co-owner can demand the division of property. Two co-owners may divide the plot of land by erecting a wall on that plot of land.