PARTNERSHIP ?
• It is the relationship between persons who have
agreed to share the profits of a business carried on
by all or any of them acting for all
• It is not a separate legal entity
• It must be for some lawful business
• The contract may be written or oral
• The business must be carried out to earn and share
profits and returns of the business
TYPES OF PARTNERSHIP
• Partnership at will
• Partnership for a fixed period
• Particular partnership
RIGHTS AND LIABILITIES OF
PARTNERS
• To indemnify the firm for any loss caused to
the firm by his fraud in the conduct
• Every partner to attend to his duties as per
the contract between them
• To share equally the profit or loss made by
the firm
• Every partner has a right to access the
books of the firm and inspect it
CONTINUED
• The property of the firm is the properties acquired
from the partnership funds. It should be used
exclusively for the use of firm’s business
ordinarily.
• The firm has to indemnify a partner in respect of
payments made and libilities incurred by him in
proper conduct of the business or doing some
emergency acts to protect the firm from incurring
any loss.
CONTINUED
• Every partner is principal on his own behalf
and agent on behalf of other partners
• Implied authority of partner as an agent of
the firm
• Any partners implied authority can be
extended or restricted by mutual agreement
• Every partner is jointly and severally liable
for all the acts of firm
CONTINUED
• If a person who is not a partner, knowingly
represents himself as a partner in a firm and he
induces others to give credit to the firm, is known
as “partner holding out”. He is liable personally
for the debts of the firm as he was a partner in the
firm.
• A transfer by a partner of his interest in the firm
does not entitle transferee to interfere in the
business but only to receive share of profits of
transferor
MINOR IN P’SHIP FIRM
• A minor cannot be a partner, but with the consent
of all the partners can be admitted to the benefits
of the partnership.
• Minor can not be made a party to the liabilities of
the firm, but his share will be
• Minor can access the accounts of the firm
• Minor has to declare his intentions within 06
months from the date of attaining majority (or
knowledge of him being a partner whichever is
later) to become a partner or not.
DISSOLUTION OF A FIRM
• By agreement (compulsory)
• If all the partners (except one) are
adjudicated insolvent or the business has
become unlawful.
• By the death of a partner (optional)
• By the adjudication of a partner as an
insolvent
• Dissolution by court
INDIAN PARTNERSHIP ACT,1932
• Sec19: Each partner is an accredited agent
to the firm and other partners
• Sec20: Partners by contract can extend or
restrict the implied authority of a partner
• Sec25: Every partner is liable jointly with
all other partners & severally for all the acts
done by the firm while he is a partner
• Sec30: A minor may be admitted only to the
benefits of a partnership
INDIAN PARTNERSHIP ACT
(contd)
• Sec42: Dissolution of partnership firm on
the happening of death/ insolvency/insanity
of a partner
• Sec68: Registration of a partnership is
optional
• Sec69: Effects of non-registration of the
firm
INDIAN PARTNERSHIP ACT,1956
• Sec11: Prohibition of associates and partnerships
exceeding 10 for firms carrying on the business of
banking & 20 for firms carrying on any other
business
• Sec125(1)(d): Charge created on the assets of a
company should be registered within 30 days of its
creation
• Sec130(3): A search in registrars office regarding
existence of prior charge over the company’s
assets should be made before granting advances to
a company