LAW OF PARTNERSHIP

Prof. K.M.V. Nambudiri

DEFINITION OF PARTNERSHIP
As per sec.4 of Indian Partnership Act, 1932, 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

CHARACTERISTICS OF PARTNERSHIP
1. Competent persons: at least two competent persons. The maximum number of partners is 20. In Banking business the maximum partners can be only 10. A person cannot be another firm, but includes a company. A minor can be partner for profits only. 2. Partnership is a contractual relation. It could be implied or express. Generally, the partnership agreement, also called Deed, should be in writing signed by all partners. It should have all the elements of a valid contract. The deed can be registered, but not legally compulsory.

CHARACTERISTICS OF PARTNERSHIP..
3. Partnership can be formed only for the purpose of carrying on business, including trade, occupation or profession. 4. Sharing of profit. A business means an activity for profit. Partnership is meant to earn profit and share the same, as per the ratio mentioned in the deed. If the deed is silent about the ratio, equally. Mutual agency: Partnership implies mutual agency. Each one of the partners is an agent of, and is acting for, all other partners.

WHO CAN BE PARTNERS

In partnership deed, the essential elements of a contract, viz. free and genuine consent of parties who are competent to contract for a lawful object and legal formalities completed. An alien enemy cannot enter into a partnership. A minor can admitted (with consent of all partners) for the benefits and not for losses. A corporation can be a partner.

PARTNERSHIP Creation Interest & Admission Females Minors Maximum Agency Liability Contractual agreement Acquired by contract Can become partner by contract Only for benefit 20 (10 in banking) Each partner is agent of others Unlimited liability of partners

HUF Arises from status, natural By birth Does not become member by birth Regular member No legal limit Only Kartha has implied authority. Unlimited to Kartha or other contracting members. Others limited to their interest. Members have only limited right for accounts. No question of registration.

Right for accounts Registration

Partners have absolute access to accounts Deed is registered

DURATION OF PARTNERSHIP
Fixed term partnerships Partnership at will Particular or Specific Job Partnerships

RIGHTS OF A PARTNER
Right to take part in business; Right to be consulted; Right of access to accounts; Right to share in profits; Right to interest on capital & advances; Right to be indemnified; Right to use partnership property; Right as an agent of the firm; Right of consent in new admissions; Right to retire and not to be expelled

DUTIES OF A PARTNER
To carry out the business for common advantage; To observe faith; To indemnify for fraud & wilful neglect; To attend diligently; To claim no remuneration; To share losses & Account for personal profits; To act within authority; To be liable jointly and severally; Not to assign his rights.

TYPES OF PARTNERS
Actual or ostensible partner; Sleeping or dormant partner; Nominal partner; Partner for profit only; Sub-partner; Partner by estoppel or holding out; Minor partner.

RECONSTITUTION OF FIRM
A firm is said to be reconstituted on: - Introduction of a new partner; - Retirement/death of an existing partner; - Expulsion of a partner; - Insolvency of a partner; - Transfer of a partners interest;