Theory question 107
Business UnitsCommerce 2 (essay)
(a) Explain to a group of Sole Proprietors who wish to form a partnership any seven problems they are likely to face
(b) State three conditions suitable for the formation of partnership business
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(a) Any seven, explained: unlimited liability of partners (except a limited partner); disagreement among partners; limited capital (members limited to 20); a partner's act binds the others; slow decisions because all must be consulted; profits must be shared; difficulty in transferring a share without consent; lack of continuity (death, retirement or bankruptcy of a partner ends it); loss of independence/personal control.
(b) Any three: where more capital is needed than one person can provide; where different skills are needed (professional practices like law, accounting, medicine); where risks need to be shared; where the business is too large for one person to manage; where the partners trust each other.
Problems in (a) are mainly the disadvantages of partnership.