Distinguish b/w Co-ownership and Partnership

by • 24/06/2013 • GeneralComments (0)409

Q.6      What is Co-Ownership? Distinguish b/w Co-ownership and Partnership?

Ans:    CO-OWNERSHIP

In the co-ownership property is owned jointly without any intention to carry on the business.

EXAMPLE

Two or more persons purchase a car without any idea, of giving it on hire. It is Co- ownership.

PARTNERSHIP

It is the relation between persons who have agreed to share the profit of a business.

EXAMPLE

Two or more persons purchase a bus with the intention of giving it on hire and distributing it s income among the partners, is the case of partnership.

Partnership

Co-ownership

Agreement It arises from a contract. It may, besides contract, arise by status or by operation of law e.g. A and B inherit a house from their parents.
Carrying on Business It is formed for carrying on a business. It may exist without any business.
Sharing of Profits It involves sharing of profits and losses. It does not always involve sharing of profits and losses.
Agency Each partner is an agent of other partners. One co-owner is not an agent of the other.
Transfer of interest A partner cannot transfer his share without the consent of all other partners. A Co-owner can transfer his interest to a third party without the consent of other co-owner.
Division of Property A partner cannot demand division of firm property. A co-owner can demand partition of joint property.
No  of Members Number of partners cannot exceed 20 for any type of business. No. of co-owners has no maximum limit.
Lien A partner Has a lien on firm property for expenses incurred by him. A co-owner has no lien on the share of other co-owner for expenses incurred.
Common Interest Partners have common interest in business. Co-owners do not have common interest in joint property.
Reimbursement Partner has legal right to get reimbursement for amount spent. Co-owner has no such right.
Law Applicable Partnership is regulated by Partnership Act, 1932. Co-ownership is not regulated by any law.

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