Partnership Vs. Joint Stock Company
Difference Between Partnership and Joint Stock Company
A partnership is the result of a specific contractual agreement among the owners or partners. The agreement need not be in writing to be effective at law, but prudence and good practice recommend a written partnership agreement to avoid misunderstanding and disagreements.
The essentials of a contract must be present for a partnership agreement to be valid and enforceable. Within the framework of legality, the relations among partners and their responsibilities are set by the terms of the agreement. If conditions are not specified by contract, then the rules of the law apply.
Any number of persons may join in a partnership agreement. For example, some of the nation’s largest law firms have hundreds of general partners, as do many of the nation’s largest securities-trading firms. Corporations may even become partners, if they are permitted to do so by their charters and applicable state law.
The earliest record of a business partnership is that of the Babylonian banking house of Egibi. This family partnership outlasted the Chaldean empire (606–539 B.C.). Partnerships are referred to in Roman law. They were widely employed by the merchants of the Middle Ages, particularly those of the Italian city-states. Later, the members of the Hanseatic League operated extensively through partnerships. In England the law of partnership came into the common law from the law merchant. In turn, the Uniform Partnership Act in the United States is essentially a codification of the common law.
Joint Stock Company
Joint Stock Company, a form of business organization that has some of the attributes of a partnership and some of a corporation, with a pooling of shareholder capital and election of a board of directors. In contrast to a corporate arrangement, however, individual shareholders are liable for the company’s debts. Some early examples of joint stock companies were the East India Company and the Hudson’s Bay Company.