THE INDIAN PARTNERSHIP ACT 1932
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THE INDIAN PARTNERSHIP ACT 1932 ‘ Partnership’ is the relation which subsists between the persons carrying on a business in common with a view to making profits 1-An association of two or more persons 2-There must be agreement entered into by all concerned 3-The Partnership is organized to carry on some business 4-The Persons concerned must agree to share the profits of the business 5-The business is to be carried on by all or any of them i-A lender of Money ii-A servant or agent iii-A widow or Child of a deceased partner iv-A previous owner of the business , receiving a share of profit v-The member of HUF vi-Burmese Buddhist , husband and Wife carrying on business vii-joint \ co-owner of property sharing profit i i f t 1-One\more partners have the sole control 2-One or more partner to contribute to the capital of firm 3-Only one of them is given the right to determine the partnership 4-the right to borrow money is exercised only by one or more partners 5-That the assets of the firm belong to one party 6-Only one of the partner shall be entitled to dissolve it 1-Agreement in writing and deeds 2-Admissions 3-Advertisements , prospectus etc containing the names of alleged partners 4-Bills to customers, Circulars etc 5-Bills of Exchange the mode in which they have been drawn 6-Drafts of Agreements 7- Letters of memorandum showing intention to a person some profit 8-Recital in agreements 9-Release executed by all the alleged partners 10-Meetings 11-Registers 12-Use of property 13-Payment of money in court Persons who have entered into partnership with another are called individually ‘ Partners’ and collectively a ‘ Firm’ and the name under which their business is carried is called the ‘ Firm name ‘ A partnership may be classified on the basis of i-Duration-The partners are at liberty to fix the duration of the partnership ii-Extent of business-The partners are at liberty to carry on one or more undertakings in business iii-Liability-An agreement to form a partnership for the purpose of carrying on an illegal trade is void i- Where the partnership is not for a fixed period of time ii-Where no provision is made as to when and how the partnership will come to an end Such a partnership is called at will because it is carried on at the willingness and desire of the partners It is a partnership which is formed for the purpose of carrying on a particular adventure or undertaking Such a partnership comes to an end on the completion of particulars venture It is a partnership which is formed for the purpose of carrying on business in general A partnership may be formed in which the liability of all partners ( except one ) is limited There must be at least one partner with unlimited liability i-It can not enter into a contract ii- It can not be sued by any of its members iii-Its members can not be sued for partition of its properties iv-It can not use a member of third party when the illegality is patent v-Its members are personally liable for its debt and also liable for a fine 1- Duration-A partnership at will has no time limit 2- Object-A partnership at will may carry out any business from time to time 3- Notice of dissolution-A particular partnership is automatically dissolved on the completion of the adventure, whereas in partnership at will, each partner may give a notice 1- Actual Partner 2- Dormant or Sleeping partner 3- Nominal partner 4- Partner in profit only 5-Sub-partner 6- Incoming partner 7 – Outgoing partner 8-Minor partner 9-Partner by estoppels 10-Quasi partner 11-Limited and Unlimited partners 1- For the benefit of partnership 2- To share profits 3- To have access to accounts 4- Share liability 5-Sue for account 6-Position of a Minor after attaining the age of Majority 7-Personal liability 8-On Discontinuation 9-Liability for holding out 10 No adjudication 1- Nature of contract-In English Law, the minor’s contract is not void, but voidable 2- Time to give public notice-According to English law, a minor , on attaining majority should give a public notice 3- Liability-According to English law, a minor who elects to become a partner will not be personally liable to third parties The Partnership is created by Agreement. The rights and duties of the partners are determined It is in the interest of the partners as well as for business, that agreement should be in writing. 1- Name and Address of the Firm 2-Name and Address of Partners 3- Scope and nature of business 4-Duration of Partnership 5-Ratio of sharing profit and loss 6-Amount of capital contributed by each partner 7-Method of maintaining of account books 8- Audit of account books 9-Borrowing of partners from the firm 10-Commission and Salaries of partners 11-The amount of drawing and interest thereon 12-Control over rights 13-allotment of work 14- Method of valuation of goodwill 15- Method relating to admission of new partners 16-Death of a partner and his legal executor 17-Method of valuation of goodwill 18-Dissolution of partnership 19-Relinquishment of partnership relations 20-Bank account 21- Arbitration clause 1-Time of Registration 2-Appointment of Registrars 3-Power to exempt from application of Registration of Firms 4-Power to make rules i-The name of the firm ii-The place of Principal place of business of the firm iii-the names of other places ,where the business is carried out iv-The date when each partner joined the firm v-The full names and permanent address of the partners vi The duration of the firm i- Name of the firm ii- location of principal place of business iii-Closing and opening of branches iv-Changes in names and addresses of partners v-Changes in constitution of the firm by inclusion \withdrawal of partner vi-Dissolution of firm vii-Withdrawal of Minor from the firm i- Rectification of Register-The Registrar of his own motion or so when directed by the court, may rectify any mistake in register of Firms ii-Penalty for furnishing false particularsAny person who signs any statement , being false , is liable for punishment iii-Rules of evidence-Any statement recorded is conclusive proof of the facts 1-No suits by partners-A partner of unregistered firm can not sue the firm 2-No suits by a firm-A firm can not sue a third party for the enforcement of any right 3-No right of set off-Set off means ,a claim by the firm 1-A suit for dissolution of a firm 2-Suit for set off 3-Right of Third Parties 4-Power of Official Receiver and Assignee 5-Firms having no place of business in India 6- Non-contractual rights 7-To realize the property of dissolved firm 8-Jurisdictional Exemption 1- Right to take part in business 2-Right to be consulted 3-Right of access to accounts 4-Right to share in profits 5-Right to interest on Capital 6-Right to interest on advances 7-Right to be indemnified 8-Right to the use of partnership property 9-Right of Partner as Agent of Firm 10-No new partner to be introduced 11-No liability before joining 12-Right to retire 13-Right not to be expelled 1-To carry on business to the greatest business advantage 2-To observe faith 3-To indemnify for fraud 4-To attend diligently 5-No to claim remuneration 6-To share losses 7-To indemnify for willful neglect 8- To hold and use property of the firm exclusively for the firm 9-To account for personal profits 10-To account for profits in competing business 11-To act within authority 12-To be liable jointly and severally 13-Not to assign his rights 1- Must relate to the normal business of firm 2-Within the scope of the business of the firm 3-To be done in the name of the firm i- Purchasing goods on behalf of Firm ii-Selling the goods of the firm iii-Receiving payment of the debts iv-Settling accounts with persons dealing with firm v-Engaging servants vi-Borrowing money on credit of the firm vii-Drawing , accepting, endorsing bills etc viii-Pledging movable property ix-Suing on behalf of the firm i-Submit a dispute ii-Open a bank account iii-Compromise on claims iv-Withdraw a suit v-Admit any liability vi-Acquire any immovable property vii-Transfer immovable property viii-Enter into a partnership 1- Extension and restriction of a partner’s implied authority 2-Effect of admissions by a partner 3-Effect of notice to an acting partner 4-Liability of a partner for acts of the firm 5-Liability of firm for wrongful act of a partner 6- Liability of firm for misapplication 1- Reconstitution of a firm 2-Introduction of a partner 3-Liability of incoming partner for firms acts 4- Liability of an incoming partner for Firm’s acts done after his admission 1- By consent-A partner may retire from an existing firm, with the consent of all other partners 2-By agreement-The partners may enter into an express agreement 3-By notice-A partner may retire by giving a notice in writing 1- Liability for the acts of the firm done before retirement 2-Liability for acts of the firm done after retirement i-Introduction of a new partner-Subject to contract between the partners ii-Outgoing or retiring partner-A partner who leaves the firm in which the remaining partners continue to carry on business 1- Right to carry on competing businessA retiring partner has the right to carry on with any other business 2-Right to share subsequent profits-On the retirement of partner ,remaining partners need to settle the accounts i- Power to be given by express contractBy an express contract ii-To be exercised by majority of partners-Must be exercised by majority of partners iii-To be exercised in goods faith-Should be exercised in absolute good faith i-Dissolution without the intervention of court-Section 40 ,41 ,42 ,43 and 44 ii- Dissolution by Agreement-As per section 40 iii-Dissolution by operation of Law-Means firm ceases to exist in the eyes of law iv- Dissolution on the happening of Certain contingencies V-Dissolution by notice of Partnership nat will vi-Dissolution by Court 1- Existing contractual obligations must be met 2-Satisfaction must be obtained 3-The firm’s assets must be converted into cash 4-The firm’s Creditor’s must be paid 5-The surplus , if any , must be distributed among partners 1- Right to have business wind up 2-Rights to have the debts of the firm settled 3-Right to personal profits earned after dissolution 4-Right to return on premium on premature dissolution 5-Right where partnership contract is rescinded 6-Right to restrain partners from use of the firms property 1-Liability for acts of partners done after dissolution 2-Continueing authority of partners for purpose of winding up 1- Can be used only for the purpose of business of firm 2-Partner’s can not deal with property on their own 3-Can not transfer any part of property 4-The debts of firm are paid first i- Property originally brought in the firm ii-Property acquired afterwards iii-Property acquired with firm’s money iv-Goodwill of the business of the firm 1-Sale of goodwill after dissolution 2-Rights of buyer and seller of goodwill 3-Restraint of Trade 4-Settlements of Partner’s accounts 5-Sharing of deficiency Application of Assets- Is determined on the basis any specific agreement Loss arising from Insolvency of a Partner-In case a partner becomes insolvent and unable to contribute i-Debts to be paid first-Out of the property of the firm ii-Private debts of Partner’s to be paid first-private debts of the partners shall be paid first i-Sec 30-On the election to become a partner or not ii- Sec 32-On the retirement\expulsion of a partner iii- Sec 33-On the retirement of registered firm iv- Sec 45 and Sec 47-On the dissolution of firm 1- Number of Partners 2-General Partners 3-Participation in Management 4- No withdrawal 5-Association 6-Registration 7-Separate entity i- Even fraudulent acts bind the firm ii-Notice to a Partner is notice to firm iii-disabilities of partner similar to those of Agents iv-Emergency powers v-Partnership by holding out and agency by holding out vi- Conclusion 1- Agreement 2-No one can become partner by birth 3-Membership of Female 4-Minor partnership 5-In case of Death 6-Liability of Partner’s 7-Maximium no of Partners 8-Agent and Principal 9-Active part in business 10-Account access 11 Ri ht d Li biliti 1-Agreement 2-Earn and distribute profits 3-transfer of shares 4-Partner as Agent 5-Right of Lien 6- Firm’s property 7-Existence of partnership 1- Registration 2-Collectin of Individuals 3-Minimum number 4-Transfer of share 5-Liabilities of Partner 6-Maximum number of Partners 7-Contract with other partners 8-Death \ Retirement 9-Share in Management 10-Partner as Agent 1- Governance 2- Partner as Agent \ Principal 3-In case of death 4-Binding of Partners 5-Legal formalities i- Promotion of social objectives ii- There is no business iii-Is not the agent of other members iv- Consent for Membership
