Q.Define 'partnership' as given in Section 4 of the Indian Partnership Act, 1932, and identify the elements this definition lays down.

The statutory definition itself packs in several distinct legal requirements, each of which must be satisfied for a partnership to exist.

Section 4 of the Indian Partnership Act, 1932 defines partnership as: "Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."

This single sentence lays down four essential elements: (i) there must be an agreement between two or more persons — partnership can never arise merely by status, as in an HUF; (ii) the agreement must relate to a business; (iii) the persons must have agreed to share the profits of that business; and (iv) the business must be carried on by all the partners, or by any of them acting for all — this last element, called mutual agency, is what the courts treat as the real test for deciding whether a partnership genuinely exists in a given case.

Reciting the definition but omitting the 'acting for all' (mutual agency) element — this is the part of the definition the Act itself treats as decisive when it must be determined whether a real partnership exists.