UNIVERSITY INSTITUTE OF LEGAL STUDIES,

PANJAB UNIVERSITY, CHANDIGARH

BUSINESS LAW PROJECT REPORT

on the topic of

MEANING AND NATURE OF PARTNERSHIP

SUBMITTED TO: SUBMITTED BY:

Ms. Preeti Bansal Charu lata

B.Com LLB(hons.)

Semester 7, Section D

Roll no. 204/20

 ACKNOWLEDGEMENT

Presentation, inspiration and motivation have always played a key role inthe success
of any venture. The completion of this project requires a lot of guidance and
assistance from many people.

Primarily, I would like to thank God for being able to complete this project with
success. I would like to express my sincere gratitude to my professor Ms. Preeti
Bansal, University institute of legal studies, Chandigarh who gave me the
opportunity, encouragement, valuable suggestions and fruitful guidance to do this
project. Class lecture helped me a lot to understand the topic and complete the
project successfully on topic,

“Meaning and Nature of Partnership”

I feel to acknowledge my indebtedness and deep sense of gratitude to the entire

faculty of department of legal studies, from where I learnt the basics of law. All the
informal discussions and intellectual support helped me in the entire duration of this
work.

Charu Lata
 TABLE OF CONTENTS

1. Introduction: Partnership
2. Meaning and definition: Partnership
3. Essential elements of Partnership
 Two or more person
 Agreement
 Business
 Share of profit and loses
 Mutual agency

4. Nature of Partnership firm

5. Test of partnership
6. Partnership and Co ownership
7. Partnership and Hindu Undivided Family
8. Partnership and Company
9. Duration of partnership
10. Conclusion
11. Bibliography
 INTRODUCTION

Partnership is one of the specific contracts which were a part of the Indian
Contract Act. 1872. In 1930, however, the provisions relating to partnership
contract were repealed and a separate Act called the Indian Partnership Act,
1932 was passed which is in force till today. It extends to the whole of India except
the State of Jammu and Kashmir. It has come into force on the 1st day of October
1932 except Section 69, which came into force on the 1st day of October 1933.

Partnerships in India are governed by the Indian Partnership 1932. Partnership is

formed as result of an agreement between two or more persons who have agreed to
share the profits of a business carried by all or any of them acting for all. Hence the
general principles of law of contracts and agency (as contained in the Indian
Contract Act 1872) also apply to partnerships except where the Act specifically
provides to the contrary. The Act mainly contains the provisions relating to the
formation of partnership the rights, duties and liabilities of partners and the
procedure for its and various types of partners including the position of a minor
partner the procedure for its dissolution etc.

Before the Indian Partnership Act, 1932, the law of partnership was dealt with in
Chapter XI of the Indian Contract Act, 1872. The present Act makes considerable
changes in definition and arrangement, gives effect (but short of making the firm a
legal person) to the mercantile view of a firm's continuity, and adds provisions for
voluntary registration of firms. The law relating to the insolvency of partners and
its effect upon partnership has been altered.

 Act not exhaustive: The Act purports merely to define and amend the law
relating to partnership, and expressly states that "nothing in this Act or any
repeal effected thereby shall affect or be deemed to affect any rule of law not
 inconsistent with this Act." The provisions of section 3 also confirm this
view.
 Act not retrospective: The Act is not retrospective and applies only to
anything done or suffered after the commencement of the Act.
 Insolvency: In spite of the fact that the Act has dealt with the effect of
insolvency upon dissolution of partnership, it does not affect any rule of
insolvency relating to partnership.

MEANING AND DEFINITION

Partnership is the relation between persons who have agreed to share the profits of
a business carried on by all or any one of them acting for all (Section 4). It,
therefore, follows that a partnership consists of three essential elements:

(i) It must be a result of an agreement between two or more persons.

(ii) The agreement must be to share the profits of the business.
(iii) The business must be carried on by all or any of them acting for all.

All these essentials must coexist before a partnership can come into existence.

Example: A manager, as a part of his remuneration, may be given a share in

profits of the business.

MEANING OF 'PARTNER', 'FIRM' AND 'FIRM NAME' [SECTION 4]

Persons who have entered into partnership with one another are called individually
‘partners’ and collectively ‘a firm’, and the name under which their business is
carried on is called the 'firm name'.
 CONCLUSION

The scope of a partnership is primarily a matter of partners’ intentions. The

application of the powers it chooses to exercise at any time is not restricted except
prohibition on illegal, immoral or fraudulent behavior that applies equally to
individuals.

1. If consent is given by the constituent company’s partners, a partner may

itself be a member of another company.

2. If the contract appears to be authorized or ratified by all partners, there

usually is no further question as to its validity.
The cases where the partnership contract validity issue arises is where one partner
made the contract without specific authority from his co-partners. Their implicit
scope of partnerships may be divided into non-trading and commercial classes.
Partners of either type can exercise certain powers in partnership. A partner can
thus retain a lawyer to safeguard the interests of the company.

All members’ joint efforts result in the successful completion of tasks and that task
or job can be easily done. Work division leads to increased work efficiency among
different partners. If some work is done through the consent of all members and
some profits are earned, then they are shared between the various partners. And
likewise, if there is some loss then it is borne by all members and not just one has
to take responsibility or compensate for it. The partnership is, therefore, a good
way to do business in my view than a single person owned company.

A partnership is one of the oldest business forms. While limited liability companies
have replaced partnership enterprises in complex enterprises, professional and
small companies continue to prefer partnerships in India and overseas.
 BIBLIOGRAPHY

BOOKS

1. POLLOCK AND MULLA

2. NH JHABWALA
3. DR. RK BANGIA
4. AVTAR SINGH

WEBSITES

1. NATURE AND ESSENTIALS OF PARTNERSHIP » (lawaudience.com)

2. Partnership in India| Definition| Essentialss (northeastlawjournal.com)