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Meaning of Co-Ownership Partnership and co-ownership have different meanings.

In partnership, there is an association of two or more, persons who carry on common business for earning profit. They share its profits and losses as per oral or verbal agreement. Co-Ownership refers to joint ownership in a property by more than one person. If two, or more persons A 6 and C, purchase a property collecUvely without any business motive it will be a case of co-ownership. Co-ownership thus has joint ownership but business is not combined with it. The main points of distinction between partnership and co-ownership as stated by Lindley are as under:Basis of Difference Partnership Co-Ownership

1. Contract Partnership always arises out of contract. Co-ownership may or may not be based on agreement. It can also arise by operation of law, such as by inheritance. On -the death of father, sans and daughters become co-owners of property. 2. Number of Partners The limit for maximum number of partners is 20 in a firm and 10 for banking. There is no ceiling on the maximum limit of co owners. 3. Agency Relationship A partner is an agent of the other partners. He can bind them for his acts in the ordinary course of business A co-owner is not the agent of the other co owner/co-owners; every co-owner is responsible for his own deeds only. 4. Sharing of Profits and Losses A partnership is always entered into for business, it involve sharing of profits and losses. A co-ownership does not involve sharing of profits and losses. 5. Transfer of Interest A partner cannot transfer his right and interest to any person without consulting his partners. A co-owner can transfer his right and interest without the consent of the other co-owners. 6. Right of Investment If a partner spends money far the business, he can demand its repayment. If a co-owner spends money for the improvement of the property, he has no legal claim (lien) for its refund. 7. Right of Division No partner can seek division of the partnership property in specie (in parts). His only right is to have a share of the profits or demand the payment of his share in cash. A co-owner has a right to demand the division of property n specie or parts. 8. Minor A minor cannot enter into a contract and as such is not able to become a regular partner of a firm. A minor can be the co owner of a property.

9. Regulations Partnership business is regulated by the Partnership Act of 1932 as adopted in Pakistan. There is no separate law to regulate co-ownership. 10. Dissolution Partnership can be dissolved on the insolvency, death, misconduct etc of a partner. A co-ownership can not be dissolved on any such grounds.

Co-ownership means joint ownership of some property which does not necessarily result in partnership. In partnership, the partners are necessarily co-owners of the proper the firm, but in co-ownership the co-owners are not necessarily partners. The enterprise may also go for business of co-ownership. The major difference between a partnership a co-ownership may be noted: 1. Mode of creation: Partnership necessarily arises from contract. But co-ownership may arise from contract or from the operation of law or from status. Business: Partnership exists for carrying on some business and to share the profits c: such business- Coownership may not lead to business activities for the purpose of profit. Nature of interest: Partnership involves community of interest, whereas co-ownership cay not necessarily involve any such interest. Transfer of shares: A partner cannot transfer his shares to an outsider without the consent of all the other partners. A co-owner can do so. Number of members: In partnership, the maximum number of members cannot exceed 10 in banking business and 20 in any other type of business, whereas there is no maximum limit of members in case of coownership. Agency relationship: A partner acts as an agent and can bind the firm for his acts in the ordinary course of business. A co-owner is not an agent of the other co-owners. Partition of joint property: A partner has no right to demand partition of joint property in specific but he can sue his copartners for dissolution of the firm and accounts. A c 3-owner is entitled to sue for the partition of the joint property.

Lien for expenses: A partner has a lien on the partnership property for the expenses incurred by him on such property on behalf of the firm. A co-owner has no such lien for expenses incurred or payment of a common debt. Regulating law: Partnership is governed by the Indian Partnership Act, 1932 but there is no statute law to govern co-ownership.



Agreement is not

It is generally arisen by the operation of law or status. essential for the formation of co-ownership.

It must be created by the agreement or contract. No contract no Partnership. Agreement may be expressed or implied.


Sharing of Profits
community sharing of profit or loss in co-

There is no concept of ownership.

Sharing of profits is the basis object of the formation of the partnership.


Under this form of organization "business" may or may not be conducted.

Various kind of partners are united to carry on any type of "business"


of another co-owner, he cannot bind

As one co-owner is not an agent another by his act.

On partner is an agent of another partner and he can bind all persons by this act.


Transferring Right
without the

A co-owner an transfer his share, right and interest to other person consent of the existing co-owner.

A partner cannot transfer his share or right to a stranger without the consent of other partner.


Maximum Limit
maximum number of coowner in the

There is no restriction for the co-ownership business.

There is restriction for minor to become a regular partner according to partnership Act. 1992.



A Minor can become regular co-

owner in the co-ownership


There is restriction for the maximum number of partnership firm (i.e. not more than 20 in ordinary business and 10 in banking business)


Division of Property
A co-owner can demand division of property for his own interest.

A partner has no right to partition of property but he can demand share of profit out of the properties.


Lien Position
an other co-owner so he has no lien on the

A co-owner not being an agent of co-ownership property.

As one partner is an agent of another partner, he has lien on the business property.

10. Right of Dissolution

The business of the co-ownership retirement of any co-owner. cannot be dissolved by the death or

The life of the partnership is affected by the death, retirement or insolvency of any partner.