Law of Partnership

(Indian Partnership Act 1932)

• The relationship between persons who have agreed
to share profits of a business carried on by all,or by
any of them acting for all.

Essentials of Partnership:
1.An association of two or more persons
2.An express agreement
3.The agreement must be to carry on some business
4.To share profits of the business
5.Must be carried on by all or any of them acting for all
Effect of non-registration of firm
• A partner of an unregistered firm cannot sue
the firm or any partner

• No suit can be filed against the third party

 Right of a Partner
• To take part in the conduct of business
• To express his opinion
• To access and inspect any books of the firm
• To share profits of the firm
• He is a joint owner of the firm’s property
• To do all such acts as are necessary to protect the
firm from loss in emergency
 Contd..
• To claim interest @6% p.a. on the advances
• To be indemnified for the liabilities incurred by
him in the ordinary course of business
• Not to be expelled
• To resist introduction of new partnership
• To retire
• To carry on competing business
 Duties of Partner
• To carry on the business to the greatest
common advantage
• To be just & faithful
• To render accounts & full information
• To indemnify for losses caused by his fraud
• To work without remuneration
• To account for secret profits
 Contd..
• Not to assign his share
• To contribute equally to the losses of the
firm
• To indemnify for all losses caused by his
wilful neglect
 Dissolution of firm
• By mutual agreement
• By notice of dissolution
• By operation of law
• By the happening of certain contingencies
• By a decree of the court
 Dissolution by court
• If the partner has become of unsound mind
• Permanent incapacity of partner
• Repeated misconduct of partner
• Wilful & persistent disregard of partnership
agreement
• Transfer of share by a partner
• Just & equitable