Section 251 The Indian Contract Act, 1872
Section 251 – The Indian Contract Act, 1872
Title: Contract of partnership
🔹 Bare Act Language:
Section 251 –
"Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
🔍 Explanation:
This section defines a partnership legally.
A partnership arises when two or more persons agree to:
Carry on a business, and
Share the profits of that business.
The business may be conducted by all partners jointly or by some partners acting on behalf of all.
🔹 Key Points:
Partnership is based on a contract (agreement) between persons.
Profit sharing is an essential element of partnership.
Not all joint business ventures form a partnership — only those with an agreement to share profits.
This definition forms the foundation for the Indian Partnership Act, 1932 (which elaborates on partnership law).
🔹 Example:
A, B, and C agree to run a shop together and share the profits equally.
They are partners and have a partnership relationship under Section 251.
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