1.

0 INTRODUCTION:

1.1 Partnership; refers to a form of unincorporated business which is carried out jointly by
two or more persons with the aim of creating profit. It being unincorporated, a partnership
cannot be separated from individual partners forming it under a contractual agreement. 1

The rights and duties of partners tend develop mainly from the nature of a partnership
agreement and the relevant law(s) governing the operation of partnership business. The
failure to discharge partnership duties has got a great possibility of affecting the operation of
a partnership business as all partners are bound. Even when it is associated with an individual
partner, it can amount to the breach of a partnership contract hence sometimes leading to the
dissolution of a firm.2 On the other hand, the entitlement of partnership rights goes hand in
hand with the discharge of duties by a partner in respect to the partnership agreement.3

2. DUTIES OF PARTNERS:

The duties of partners can be categorized into two groups namely, the duties between
partners themselves and the duties between partners and the third parties.

2.1 Duties between partners themselves.

(a) Taking care of the properties of the firm; partners in a partnership are duty
bound to take care of the properties, rights and interests in properties of a firm.
This is by the virtue of section 195(1) of the law of contract act. 4 The section does
further describe the nature of the property (s) that is to be held by partners
depending on the nature of the partnership agreement or the law (the law of the
contract act).5

1
Section 190 of The Law of Contract Act.( CAP.345 R.E 2019)
2
Mwakajinga, J.E.A (2004); Business Law (volume 1) (1st Edn) Government press Dar es
Salaam – Tanzania.
3
Ibid…,
4
( CAP.345 R.E 2019).
Mwakajinga, J.E.A (2004); Business Law (volume 1) (1st Edn) Government press Dar es
5

Salaam – Tanzania.
 (b) Carrying on business for the common advantage of all partners; section 192
of the Law of contract act does provide to this effect. 6 This is to say, partners have
a duty to carry business in the manner that will not be prejudicial to the welfare of
the partnership. Section 192 provides also for other duties and requirements that
should be met in order to make this duty being well achieved, among other things
being rendering true accounts, being faithful to each other and providing full
information of all things that tend to affect the partnership. 7 On the other hand
when a partner is found not to be properly discharging this duty (such that his
manner is doing business is prejudicial to other partners of the firm), the court is
vested with the power to dissolve the partnership mainly following the claim
levelled by other partner(s) as provided under section 125 (c) and (d) of the law of
contract act.8

(c) The duty to account for personal profits; A partner also is duty bound to
account for the personal profits that he/she makes as a result of using the firm’s
property or name and pay it to the firm. This is provided for under section 196 (a)
of the law of contract act. 9
The rationale behind this duty is founded on the
concept that all partners of the firm are expected to carry out business with the
aim of creating common profit for all. This then helps in limiting some of the
partners to get a lion’s share of profits and carrying out a competitive business to
that of the firm.

(d) To contribute equally for losses sustained by the firm; All partners in a
partnership owe the duty of collectively contributing for the losses that are
incurred by a firm as provided under section 194 (e) of the law of contract act. 10
This is because of the principal-agent relationship that exists between them
6
Ibid…,
7
http://sherianajamii.com/2021/01/partnership-law-in-tanzania.html.
8
( CAP.345 R.E 2019)
9
Ibid….
 provided that a loss caused by individual partner was incurred when acting in the
limit of the authority vested in him.

(e) Indemnifying the firm for any loss he has caused by his fraud; it should be
born in mind that though all partners are supposed to be collectively responsible
for any loss incurred by the firm. On the other hand, personal fraud leading to loss
made by one of the partner makes that partner to be duty bound to indemnify the
firm for that loss he has caused. This duty is provided for under section 194 (g) of
the law of contract act. 11

2.2 Duties between partners and third parties.

(a) To act in the limit of power vested in him; section 201 of the law of contract act
provides to the effect that, partner’s acts when acting as an agent of the firm bind
other partners.12 On the other hand the same section does give an exception of partners
not being bound by the acts of another partner who acts beyond or with no authority
given to him. This is to say a partner acting to third parties as an agent of the firm is
duty bound not to act beyond his authority or else he will be personally responsible
for any liability that may arise as a result of his acts.13

(b) To act with due diligence and skill when dealing with third parties; every partner
owes a duty of ensuring that he discharges his business obligations with care,
circumspection and all the skills he has in the way that he will render services to the
third parties well without leading to any liability to the partnership. This is provided
for under section of the law of contract act.14

(c) The duty to compensate the third part for the loss or injury arising in the
ordinary cause of business; this means that provided that partners work jointly and
collectively to the extent that the acts of one partner binds all partners, then every

10
( CAP.345 R.E 2019)
11
Ibid…,.
12
Ibid…..,
13
Mwakajinga, J.E.A (2004); Business Law (volume 1) (1st Edn) Government press Dar es Salaam –
Tanzania.
14
http://sherianajamii.com/2021/01/partnership-law-in-tanzania.html .
 partner is duty bound to compensate to the third part in case of any loss or injury
caused by any partner or the whole firm itself. Example in the case of MELTA
MEYASI VS NATIONAL BANK OF COMMERCE the partner in a firm (Melta
Meyasi) was held to have a duty to pay the debt of the firm (rombo brothers) it owed
to the bank which was a result of an overdraft made by the firm. 15

3. RIGHTS OF PARTNERS

(a) To have access to books of the firm; every partner is entitled to the right of inspecting
books and other documents which reveals how the partnership business is conducted. This is
by virtue of section 194(c) of the Law of contract act.16 Example, a partner can in a timely
manner inspects and has copy of accounts and financial statements like profit and loss
account, balance sheet and trial balances of a partnership business. The rationally behind
this right is to make partners aware of what is going on in a partnership business. This is
because of the joint and severally liability of all partners in case of any fault or loss incurred
by the partnership.17

(b) The right to decide and consent on every matter arising connected with the
partnership business; this is by virtue of section 194(b) of the Law of contract act .18 This
means that all decisions made with the view of having effect to the partnership business,
should consider the participation and consent of all partners.

(c) The right to share profits of the firm; this is by virtue of section 194 (e) of the law of
contract act.19 Just like how partners are made to be collectively liable in case of any loss
incurred by the firm, the same is also required when it comes to the issue of sharing the
profits earned by the firm. It should also be born in mind that, creation of profits by partners
is one of great essentials making the partnership to be legally alive. 20

15
1977 LTR NO 42,
16
( CAP.345 R.E 2019).
Kurian , K. D (1987); Business Law I (BBs 104), college of Adult and Distance Education. University of
17

Nairobi Kenya.
18
( CAP.345 R.E 2019)

( CAP.345 R.E 2019)

19

Kurian , K. D (1987); Business Law I (BBs 104), college of Adult and Distance Education. University of
20

Nairobi Kenya.
(d) The right of being indemnified by the firm ; the partner has a right to be indemnified
by the firm in case of payments and personal liabilities that he incurs in the course of doing
business or when doing anything necessary for the aim of preserving the business of the
firm. This is by the virtue of section 194 (f) of the law of contract act. 21 The partnership will
however not be under the duty to indemnify the partner if he incurs cost not in the ordinary
cause of business to the extent that a prudent man ought not to have done.

(e) The right to take part in the management of the partnership business; this right
depends on the nature of the partnership agreement which in turn determines the type of
partners existing in a particular firm. This right is provided for under section 194 (a) of the
law of contract act.22 For instance, under the principal- agent relationship existing between
partners, every partner is deemed to take management in the business of firm (being a general
partner). However this is not always the case since the terms of a partnership agreement can
sometimes also provide for the existence of other types of partners like sleeping partners who
do not take part in the management of a partnership business. 23

(f) To outgo from the firm; A partner also enjoys a right of getting out of the firm
depending on the terms and conditions for doing so stipulated in the partnership agreement.
This right is sprovided for under section 217 of the law of contract act. 24 In exercising this
right the partner who decides to get out from the firm will give notice to other partners as
provided for under section 217 when read together with section 212 (1) (c) and 212 (2). The
act of one of the partner to get out the firm implies that the partnership is dissolved. 25

4. CONCLUSSION;

The rights and duties of partners forming a partnership develop from the principal -agent
relationship which exists between partners whereby all partners are severally and jointly
21
( CAP.345 R.E 2019)

22
Ibid…,

23
Kurian , K. D (1987); Business Law I (BBs 104), college of Adult and Distance Education. University of
Nairobi Kenya.

24
( CAP.345 R.E 2019).
25
Mwakajinga, J.E.A (2004); Business Law (volume 1) (1st Edn) Government press Dar es Salaam – Tanzania.
responsible for any liability arising in the firm.26 This relationship on the other side is the one
which leads to the collective and common participation and sharing of profits and losses that
the firm incurs in the management of a business. It is thus expected for a partner neither to
take a lion’s share of the what is earned as a profit nor bearing a personal liability unless
under some circumstances depending on the nature of a partnership agreement.27

26
Mwakajinga, J.E.A (2004); Business Law (volume 1) (1st Edn) Government press Dar es Salaam – Tanzania.

27
http://sherianajamii.com/2021/01/partnership-law-in-tanzania.html.