How is a partnership typically formed?

A partnership is typically formed through an agreement between two or more parties to carry on a business for profit. This fundamental principle of partnership law highlights that a partnership arises when individuals come together intending to conduct a joint business venture. The parties involved must share profits, losses, and management responsibility, creating a legal relationship governed by partnership principles.

While a verbal agreement can be valid, it often leads to ambiguity regarding the terms of the partnership. Registration with the state can provide benefits, such as formal recognition and legal protection, but it is not a prerequisite for the formation of a partnership. Similarly, a court order is not a typical means of forming a partnership; courts may intervene in partnership disputes but do not establish partnerships themselves. Therefore, the essence of a partnership lies in the mutual agreement of the partners to engage in profit-making activities together.