1. PARTNERSHIP
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2. What is partnership?
Under sec 4 the Indian partnership act (IX of 1932) defined as the “relationship between persons who have agreed to share profits of a business carried on by all, or by any one of them acting for all.”
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3. The following can enter into a partnership
INDIVIDUAL
FIRM
COMPANY
TRUSTEES
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4. INDIVIDUAL: An individual, who is competent to contract, can become a partner in the partnership firm. FIRM: A partnership firm is not a person and therefore a firm can not enter into partnership with any firm or individual. But a partner of the partnership firm can enter into partnership with other persons and he can share the profits of the said firm with his other co-partners of the parent firm.
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5. COMPANY: A company is a juristic person and therefore can become a partner in a partnership firm, if it is authorized to do so by its objects.
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6. TRUSTEES: Trustees of private religious trust, family trust and trustees of Hindu mutts or other religious endowments are juristic persons and can therefore enter into partnership, unless their constitution or objects forbid.
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7. “Partners”, “Firm”, “Firm Name” (sec 4)
Persons who have entered in to partnership with one another are called individually “partners”. And collectively a “firm”.
The name under which the business of a firm carried out is called the “firm name”.
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8. Types of partners Partner by holding out, or by estoppels (sec 28(1)).
Dormant or sleeping partner.
Nominal partner.
Sub partner.
Working partner.
Incoming partner.
Outgoing partner.
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9. Registration of firm.
It must be accompanied by the prescribed fee stating:
The firm name.
The place or principal place of business of the firm.
The names of the any other places where the firm carries on business.
The date when each partner join the firm.
The name in full and addresses of the partners.
The duration of the firm.
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10. NOTE: registration of the firm is not compulsory (sec 69).
Contd….
NOTE: registration of the firm is not compulsory (sec 69).
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11. Effects of non-registration
A partner of a unregistered firm can not file a suit against the firm or any partner.
No suit can be filed on behalf of an unregistered firm against any third party for the purpose of enforcing a right arising from a contract.
An unregistered firm can’t claim a set of in a suit.
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12. Essentials of partnership
Partnership is an association of two or more persons.
Partnership must be the result of an agreement between two or more persons.
The agreement must be to carry on some business.
The agreement must be to share profits of the business.
Business must be carried on by all or any of them acting for all.
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13. RIGHTS OF PARTNER
Right to take part in the conduct of business. (sec 12(a))
Right to express his opinion on any matter. (sec12(c))
Right to have access to and inspect and copy any book of the firm. (sec12(d))
Right to share equally the profit of the firm. (sec13(b))
A partner is a joint owner of firm’s property.
In an emergency, a partner has a right to do all such acts as are reasonably necessary to protect the firm from loss.
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14. Not to be expelled. (sec33(1))
CONTD……
7. He has a right to claim 6% on advance made by him to the firm. (sec 13(c))
He has a right to be indemnified for liabilities incurred by him during the ordinary course of business. (sec13(e))
Not to be expelled. (sec33(1))
Right to resist the introduction of a new partner.(sec31(1))
Right to retire. (sec32(1))
Right to carry on competing business after ceasing to be a partner. (sec36(1))
In certain cases right of outgoing partner to share subsequent profit. (sec37)
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15. DUTIES OF PARTNERS sec(9)
1. To carry on the business of the firms to the greatest common advantage.
2. To be just and faithful to each other.
3. To render true account and full information of all things affecting the firm.
4. To indemnify for loss caused by his fraud.
5. Not to assign his share.
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16. 6. To account for profits of a competing business. 7
6. To account for profits of a competing business To account for secret profits. 8. Unless otherwise agreed, to contribute equally to the losses of the firm. 9. To indemnify the firms for any loss caused by his willful neglect.
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17. MINOR AS A PARTNER sec.30
1. He has a right to such share of property and of the profits of the firm as may be agreed upon between the partners.
2. He may have access to and inspect and copy any of the accounts of the firm.
3. Minor’s share in the property and of the profits of the firm is liable for the acts of the firm, but the minor is not personally liable for any such act.
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18. 4. Such minor partner has no right while he continues to be member to file a suit against the other partners for accounts or for payment of his share in the profits or property of the firm. He can do so only when he wants to break his connection with the firm. 5. Where he files a suit for severing his connection with the firm, his share will be determined by a valuation, according to the principles laid down in Section 48, for making accounts of dissolved partnership.
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19. 6. Minor Attaining Majority: At any time within six months of his attaining majority, or of his obtaining the knowledge that he had been admitted to the benefits of partnership, whichever date is later, the minor may give the public notice that he has elected to become or that he has elected not to become a partner of the firm.
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20. Dissolution of partnership sec. (39-44)
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21. What is dissolution?
The dissolution of a firm means the discontinuance of the jural relation between all the partners of the firm.
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22. Dissolution of firm Dissolution without order of court (sec 40-43)
Dissolution by order
of court
(sec 44)a
By mutual
agreement
By notice
By operation
Of law
By certain
contingencies
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23. Dissolution without order of court
(sec 40-43)
By mutual agreement.
By notice
(a) state the intention to dissolve.
(b) be in writing
By operation of law
(a) if one of the partners are adjudicated as insolvent.
(b) by the unlawful happening of an event.
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24. By the happening of certain contingencies
(continued...)
By the happening of certain contingencies
(a) if the firm is constituted for a fixed term; on the expiry of that term.
(b) on the death of a partner.
(c) on the adjudication of a partner as an insolvent.
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25. Dissolution by court (continued…)
(a) if a partner has become of unsound mind.
(b) permanent incapacity of a partner.
(c) misconduct of a partner affecting the business.
(d) willful & persistent disregard of partnership agreement by a partner.
(e) transfer of interest or share by a partner.
(f ) business of the firm can not be carried on except at loss.
(g) just and equitable.
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