Partnerships in organizational development and strategy

Partnerships

In the realm of business organization, the time-honored saying that "Two heads are better than one," relatively applies. Following the same logic, "Three heads is better than two, four is better than three and so on." An individual who is engaged in business or in practice of a profession may find the need to expand its horizons to cope with an increase in demand or cover a larger market but is unable to do so due to a number of constraints brought about by his limited capacity as an individual proprietor. For these reasons, he seeks the assistance of another trusted individual or group of individuals that possesses the capacity as well as the resources to achieve this progress. In this realization, a partnership is formed.

Partnership may be well defined to be an association of two or more persons who bind themselves to contribute money, property or industry to a common fund with the intention of dividing profits among themselves. It is an association of natural persons referred to as "partners," who possesses the capacity to enter into binding agreements. The partners are to carry on with the business as co-owners of the partnership property as well its profits earned and losses incurred. Like all business, the object of a partnership entity must be licit and must be established for the purpose of generating profit of which is to be distributed among the partners. Partnerships are a popular form of business because of its ease of formation, merely consensual as between parties, and because they allow several individuals to combine their labor and skills in a business venture in addition to obtaining more capital than a single proprietor can obtain and allow the sharing of risks in an increasingly expanding business.

Consequently, two or more persons may also form a partnership for the practice of their common profession. Partnerships are particularly preferred in the service professions such as Law, Medicine and Accounting. These professions have not adopted a more complex corporate form of business because of their long standing tradition of close professional association with and commitment to clients as well as to their business of rendering professional service.

A partnership, once formed, acquires juridical personality separate and distinct from that of each of the partners. Therefore, a partnership may enter into binding contracts in its own name. Money, property and industry contributed into a common fund, whether invested at the time of formation or subsequent thereof becomes property of the partnership. Each partner shall be deemed co-owners of such property and shall have equal rights. Each partner shall also have a propriety interest in the partnership which represents their share in the earnings and in equity..