Presenters:

Kamran Siddiq
Syed Wajahat Ali
Syed Arshad Ali
 ARSHAD PART
 Section 4 of the Indian Partnership Act,
1932 defines Partnership as the relation
between persons who have agreed to
share the profits of a business carried on
by all or anyone of them acting for all.”
 There must be an agreement.
 Agreement between two or more

persons.
 Must carry on some business
 Share profits of the business
 Business is carried on by all or any

one of them acting for all (mutual

agency)
 Based on agreement
 Agreement may be express or implied
In Writing : helpful in times of adversity
Written agreement : “Partnership Deed”

 Essence of Partnership : Trust & Confidence

 Drafted with care and signed by all partners
 Stamped in accordance with Indian Stamp Act
 Firm should be registered and copy of the
Deed to be filed with the Registrar
 Prepared for resolving mutual differences
 Usual Contents :
Date of Agreement
Name and Address of the Firm
Name and Address of the Partners
Nature of Business
Duration of Partnership
Capital invested by each partner
Ratio to divide profits and loss
 Usual Contents Contd. :
Appointment of Auditor and remuneration
Drawing by partners and interest
Interest on Capital and Advances
Salary and Commission payable to partners
Duties, Functions and Powers of Partners
Rules regarding admission, retirement and death
Dissolution
Arbitration
Method of valuation of Goodwill
 Wajahat
 A contract of partnership may be entered into
by every person who is competent to enter
into a contract (sec 11 of the Indian Contract,
1872).

Alien Enemy: An alien enemy cannot enter into a

contract of partner ship with an Indian subject. An
alien friend ca do so.

Minor: Minor cannot become a partner in a firm but

with consent of all partners, he may be admitted to
the benefits of partnership.
Person of unsound mind: a person of unsound
mind is not competent to enter into a contract of
partnership.

Married woman: A married woman can enter into a

contract of partnership.

Corporation: A corporation, a registered company,

can enter into contract of partnership as a single
individual but not as a group of individuals
comprising it.
Person who have entered into
partnership with one another are called
individually ‘partners’ and collectively a
‘firm’, and under which the business is
carried on is called ‘firm name’(sec
4,para 2)
 Name under which the business is carried on
 Any name
 Should not be a name already adopted by a
reputed firm, to mislead public
 Should not contain words : Crown, Emperor,
King, Queen, Royal, Empire, Imperial or words
expressing or implying the sanction, approval
or patronage of Government
 Partnership Firm

Not a separate person Separate juristic person

Contractual obligation Perpetual succession

Individual property of Can hold property and
partners sue or be sued in its own
name
Dissolution on cessation Members can come and
leave
Partners inter se contract Members contract with
Co
Contractual liability Members liability may be
ltd.
No requirement Accounts & Audit
mandatory
 Khurram part
 Partnership at Will
No provision in contract between the partners for
Duration of Partnership
Determination of Partnership
If any partner gives notice of dissolution in writing,
the partnership is dissolved.
 Particular Partnership
A person may become a partner with another
person in particular adventures or undertakings.
On completion of such a venture, the partnership
comes to an end.
 Partnership for a Fixed Term
Duration is fixed
Partnership comes to an end when the term
expires.
If Partners continue the business after the fixed
period, it becomes partnership at will.
 Actual or Active Partner
Engaged in actual conduct of the business
His acts binds the firm and other partners
Notice to be given in case of retirement

 Sleeping or Dormant Partner

Does not take part in the conduct of business
Contributes his share of capital and enjoys profits
and losses
Not known to outside world
Not liable to third parties for the acts of the firm.
Not required to give notice in case of retirement
 Nominal Partners
No real interest in business, Does not contribute
any capital, Lends his name only
No share in profits but liable to third parties for all
acts of the firm
 Partner in Profits only
Shares the profits but not losses
No interest in the management of the firm
Liability for the acts of the firm is unlimited
 4th Member
 Rights Duties

Take part in business Carry business in best

mutual interest
Express opinion (majority Just and Faithful
to prevail)
Express opinion (majority Diligently attend business
to prevail)
Joint ownership Share profits/loss as per
contract
Right to be indemnified Indemnify partners for loss
due to fraud
Right to resist introduction Not to assign
of new partner

Right to access to books of Render true and fair

accounts accounts
 The dissolution of partnership between all the
partners of a firm is called ‘dissolution of
firm’ (sec 39).This means there is difference
between ‘dissolution of partnership’ and
‘dissolution of firm’.
 MODE OF DISSOLUTION OF FIRM

Dissolution Without Dissolution by

Order of Court Court

By Agreement
(Sec 40)

Compulsory
Dissolution (Sec 41)

On happening of Certain
Contingencies (Sec 42)

By Notice (Sec 43)

 Kamran
 Dissolution By Agreement:
With the consent of all partners

In accordance with a contract between them.

The contract of the dissolution of the firm may be

expressed or implied
 Compulsory Dissolution :
Business of the firm become unlawful.

Insolvency of all partners, or all but one partner, a

partner on being adjudicated insolvent ceases to be a
partner from the date of order of insolvency.
 On Happening of Certain Contingencies:
The expiry of the term for which the firm was
constituted.
The completion of particular adventure or
adventures. if the firm is constituted for the
execution thereof.
The death of partner and,
The adjudication of a partner as an insolvent
 By Notice:
When partnership at will it can be dissolve by
any partner by given notice to other. The
notice should contain clearance and valid
reason of intention to dissolve partnership in
writing and signed by him and also to be
served to all partners.
 Under section 44. the court may at the suit of
a partner, dissolve a firm on the following
grounds:

Insanity (Sec 44 a): Where a partner become

unsound mind, the court may dissolve the firm on
the petition of any other partner.

Permanent Incapacity: (Sec 44b): Where a partner

become in any way permanently incapable of
performing his duties as a partner, the court may
dissolve the firm.
Misconduct (Sec 44 c): Where a partner other than
partner suing, is guilty of misconduct and it is likely
to affect prejudicially the carrying on the business,
the court may dissolve the firm.

Persisitant Breach of agreement: (Sec 44d): Where a

partner other than partner suing, wilfully or
persistently commits the breach of the partnership
agreement relating to the management of the affair
of the firm , or otherwise so conduct himself that is
not reasonably practicable for the other partner to
carry out the business with him, the court may
dissolve the firm.
Transfer of Interest (Sec 44 e): Where a partner has in
any way transferred the whole of his interest in the firm
to a third party or where his share has been attached
under decree, or sold in recovery of arrears of land
revenue, the court may dissolve the firm at a instance of
any other partner.

Business working at loss: (Sec 44e): Where the

business of the firm cannot be carried on except at a
loss, the court may dissolve the firm at the suit of
partner.
Any other Ground: (Sec 44f): The court may dissolve a
firm on any ground which renders it just and equitable
that the firm should be dissolved .