The partnership is defined as in Partnership Act, 1932, the relationship between two or more persons to do legal business.  The main characteristics of partnership firm are:

• Agreement
  An agreement is a basis for forming the partnership. The partnership is a result of a contract or an agreement that is done between the partners. It is a written form signed by all the partners to carry on business for earning and sharing the profit or loss. It does not arise from birth, status or inheritance or succession.
  
  
• Joint Ownership
  Partnership has two or more partners. The amount of capital of the partners may, differ from one another as per their agreement. Partnership has no separate existence apart from the partners composing it.
  
  
• Joint Management
  The partnership business can be carried on by all the partners or by any one or more acting for all.For the smooth operation of the firm, the partners divide the duties and responsibilities as per the partnership agreement. the partners have to trust on another partner in managing the daily activities.
  
  
• Sharing of profit
  At an agreed ratio, the profit or loss is shared between or among partners. In the absence of an agreement for sharing profit, all partners should share pofit equally.
  
  
• No separate legal entity
  According to law, the partners and partnership firm are treated as one and same. The death, lunacy, insolvency disability, etc. of partners or partners easily affect the life of partnership firm. Partnership firm cannot make agreement contract or perform business in its name independently.
  
  
• Unlimited Liability
  Every partner has unlimited liability. If the firm fails to satisfy its debt, each partner is liable to repay all the debts of business even from his personal property.  In this business, liability is not limited to the property of the business.
  
  
• Restriction in transferring method
   Partner or none of the partners are not allowed to transfer his interest or share to outsiders without the consent of all the partners. Thus there is a restriction of interest of a partner.
  
  
• Role of principal and agent
  Each partner  plays the role of a principal for outsiders and an agent for the other partners. Partnership is managed by all partners  with equal responsibilities.