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• The capitalist partners cannot engage for their own account in any operation
which is of the kind of business in which the partnerhip is engaged, unless
there is a stipulation to the contrary.
• Any capitalist partner violating this prohibition shall bring to the common
fund any profits accruing to him from his transactions, and dshall personally
bear all the losses.
Right of capitalist partner to engage in business

• The capitalist partner is only prohibited from engaging from his own account
in any operation which is the same as or similar to business in which
partnership is engaged.
• The law does not prohibit a partner from engaging in enterprises in his own
behalf during the period that he is a member of firm but permits him to
carry on a business or activity not connected or competing with that of the
Reason for the prohibition
one partner will not be permitted to retain for himself alone as against his co-
partners benefits from partnership relation. This principle prevents a partner
from availing himself personally of information obtained by him in the course
of transaction of partnership business or by reason of his connection with the
firm regarding the business secrets and clientele of the firm to its prejudice.