Reasons Why Partnership Is a Risky Business Essay

Exclusively available on Available only on IvyPanda® Made by Human No AI

Introduction

A partnership is a simple form of business ownership comprising few members. Even though partners enjoy a significant advantage in operations such as large capital contributions, cases of fallout are rampant, especially when there is a misunderstanding among the people involved. First, the facet of unlimited liability makes a partnership company risky. For instance, in case of liquidation, a partner may be forced to clear the outstanding debts, especially when the other member fails to contribute. In addition, since the agreement requires profits and losses to be shared equally, in the event of damages caused by one party, the other participant will bear the consequences equally.

Discussion

Generally, a partnership is built on mutual trust between the partners. Supposing one party acts against the established reliance, the whole firm might be impacted negatively (Alshurideh et al., 2022). For instance, a member may opt to start a different business that competes with the partnership leading to a conflict of interest. Similarly, an individual may fail to contribute the agreed amount towards the operations, causing mistrust. The mentioned conducts can potentially harm the productivity of the business.

Furthermore, in a partnership, one party’s acts can negatively affect the other member who acted in good faith. For instance, if a partner engages in fraudulent activities, the firm may incur legal charges (Yan et al., 2020). In addition, practicing unethical conduct may affect the image of the business leading to losses. In a partnership, partners face legal, management, tax, and personal liabilities.

Conclusion

The participants must contribute equally towards the mentioned obligation. For example, if a business engages in illegal or a partner participates in unlawful activity, all the parties must be held responsible for the actions. Therefore, it is essential for partners to act accordingly in such joint firms to minimize negative impacts on business performance.

References

Alshurideh, M., Kurdi, B., Alzoubi, H., Obeidat, B., Hamadneh, S., & Ahmad, A. (2022). . Uncertain Supply Chain Management, 10(4), 1191-1202. Web.

Yan, J., Li, X., Shi, Y., Sun, S., & Wang, H. (2020). . Information & Management, 57(3). Web.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2024, February 19). Reasons Why Partnership Is a Risky Business. https://ivypanda.com/essays/reasons-why-partnership-is-a-risky-business/

Work Cited

"Reasons Why Partnership Is a Risky Business." IvyPanda, 19 Feb. 2024, ivypanda.com/essays/reasons-why-partnership-is-a-risky-business/.

References

IvyPanda. (2024) 'Reasons Why Partnership Is a Risky Business'. 19 February.

References

IvyPanda. 2024. "Reasons Why Partnership Is a Risky Business." February 19, 2024. https://ivypanda.com/essays/reasons-why-partnership-is-a-risky-business/.

1. IvyPanda. "Reasons Why Partnership Is a Risky Business." February 19, 2024. https://ivypanda.com/essays/reasons-why-partnership-is-a-risky-business/.


Bibliography


IvyPanda. "Reasons Why Partnership Is a Risky Business." February 19, 2024. https://ivypanda.com/essays/reasons-why-partnership-is-a-risky-business/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1