DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : R.Dasharatham
Designation : Lecturer
Branch : D.C.C.P.
Institute : GPW, Warangal
Year : I year
Subject : Business Organization
Subject code : CCP-104
Topic : Forms of Business
Organization-Sole Trading
and Partnership
Duration : 100 mts
Sub topic : Demerits of Partnership
Teaching Aids: :P.P.T., Animation, Photos
CCP104.17 TO 18 1
Objectives

On completion of this period you would be

able to know :

 Demerits of partnership firm

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 Demerits of Partnership
1.Unlimited Liability: Personal properties of partners
liable for business losses.

2. Limited Resources: Large scale business operation

cannot be possible.

3. Difference of opinions: Partners may not agree with

each other and hence it may lead to differences and
costly litigations and dissolution.
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Demerits of Partnership

4. Divided Responsibility: Responsibility of the

management is divided and burden lies on the active
partners.

5. Joint and several Liability : Each and every partner

is jointly and severally liable for the debts of the firm.
Creditors may recover their debts from the personal
properties of the partners.

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Demerits of Partnership:

6. Restriction on the transfer of shares:

A partner cannot have the right to transfer his share
without the consent of the other partners.

7. No perpetual existence:
A partnership ceases to exist on the death,
insolvency, lunacy or retirement of a partner.
CCP104.17 TO 18 5
Demerits of Partnership Firm:

8. Lack of Public Confidence:

As the accounts of the Partnership need not be
audited by chartered accountants, public may not
have confidence on the financial matters.
9.Dishonesty of a partner:
If a partner is dishonest, it may affect the interest of
all partners and existence of the firm.

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Demerits of Partnership Firm:

10. Delay in Decisions:

Decisions are to be taken with the consent
of all partners. Hence it may lead to delay in
decisions.

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Summary

We have discussed about

 Demerits of the partnership firm

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 Quiz

1. Partner’s share/right can be easily transferred

without the consent of others

a) True
b) False

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2. A partnership can raise unlimited capital

a) True
b) False

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Frequently Asked Questions

2. List out six demerits of partnership

4. Explain the disadvantage of the partnership

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Thank You

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