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Name: Utsav (9), Deepen(46), Pratik(39), Tinku(37), Gaurav(10), Manas(33), Vargav(38), N. K. Chetri(52).

INDIAN PARTNERSHIP ACT-1932

DEFINITION OF PARTNERSHIP

The English partnership Act defines Partnership as The relation which subsists between persons carrying on a business in common with a view of profit.

ACCORDING TO INDIAN PARTNERSHIP ACT 1932 (SEC 4).


Partnership is the relation between persons who have agreed to share the profits of a business carried on by all of them or any one of them acting for all.

ESSENTIAL CHARACTERISTICS
Association of two or more persons; there must be two or more persons to form a partnership; (According to Indian Companies Act 1956 the maximum numbers of partners should not exceed 10 for banking business and 20 for other business.) Partnership is a result of an agreement, it must come into existence by an agreement, not by the operation law. Partnership can only be formed to carryout some business with intention of earning profit such business must be legal.

Contd

Contd

The agreement among the partners must be aimed at sharing profit. If some partner is deprived from this right he cannot be called in the partner of the firm. All the partners can participate in the business, or any partner can act as mutual agent of other partners, i.e. he can bind the other partner by his acts.

PARTNERSHIP DEED.

Since Partnership is an result of an agreement, thus there are some essential to be fulfilled in a partnership deed; they are also called as ARTICLES OF PARTNERSHIP.
So some essential of a partnership deed are : Name and address of the firm, Name and address of the partner, Type and nature of the business firm tends to do, Amount of capital contributed by each partner, Interest of capital ; in absence of the deed it is considered @ 6% per annum, Drawing entitlement,
Contd

Contd

Interest on drawing, Profit sharing ratio; in absence of deed is considered to be equal among the partners, Salary to be paid to any partner, Estimation of goodwill and Date of commencement of partnership.

ACTUAL PARTNERS

PARTNERS IN PROFIT ONLY

NOMINAL PARTNERS

SUB PARTNER

TYPES OF PARTNERS

SLEEPING PARTNER

PARTNERS BY HOLDING OUT/ESTOPPEL

MINOR PARTNERS

TYPES OF PARTNERS
Actual or Ostensible partner: The person who becomes a partner by an agreement and is actively engaged in the commencement of the business and his identity is known to the outer world and has liabilities towards the firms debts, if he wants to retire he does have to give an public announcement. Nominal Partner: he is the person who invests his name in the firm, he does not have to invest in the capital of the firm nor he has any share in the profits of the firm.

Contd

Contd

He does not take part in the management of the firm but he along with the other firm is liable for the debts incurred by the firm. Difference between Sleeping partner and Nominal partner is that, the sleeping partner is not known as the partner of the firm to the outer world yet he has share in the profits of the firm, where as the later one is known to the world as a partner yet he does not share the profit of the firm. But both are liable for the debts incurred by the firm.

Contd

CONT.

Sleeping Partner: Like other partners of the firm he invests capital in the firm & takes part in the commencement of the business . But his identity is not disclosed in the outer world & acts like a undisclosed principal and has liabilities towards the firms debt .If he wants to retire he does not have to give a public notice .

Contd

Partners in Profit Only: sometimes partners may agree that the partners shall get the share of profits only and that he shall not be liable for the losses. Such type of partners are called partners in profit only. Sub partners: when a partner agrees to share his profit with a third person , that third person is known as the sub partner of the firm. Sub-partner is a no way connected to the firm and cannot represent himself as the partner of the firm. Partners by Estoppel / Holding out : Sometimes a partner who is not a partner in a firm may, under certain circumstances, be liable for its debts as if he were a partner.

RIGHTS OF A PARTNER.
Right to take part in the business. Right to be consulted. Right of access to books of account. Right in share of profits. Right on Interest on capital. Right to interest on advances. Right to be indemnified. Right to use the partnership property. Right of partners on being an agent to other partners. Right to resent entry of any new partner

Contd

Contd

No liability before joining. Right to retire. Right not to be expelled. Right of outgoing partner to share the subsequent profit.

DUTIES OF A PARTNER
To carry on the business to the greatest common advantage. To observe faith. To indemnified fraud. To attend diligently. Not to claim remuneration. To share losses. To indemnify for willful neglect. To hold and use the firms property exclusively for the firm. Account for personal profit.

RELATION OF PARTNERS TO THIRD PARTY:


o

  o

Every partner is the agent of the firm for the purpose of the business of the firm (Sec .18: 1932 IPA). He can act on behalf of the firm and bind the firm provided He does the act for carrying on, in the usual way, business of the kind carried on by the firm. The act is done in the name of the firm. Implied authority of a partner: The authority of a partner means the capacity of a partner to bind the firm by his act. This authority may be expressed or implied. Where the authority to a partner to act is expressly
Contd

Contd

conferred by an agreement, it is called Express Authority. But there is no partnership agreement or where the agreement is silent, The act of a partner which is carry on, in the usual way, business of the kind carried on binds the firm Sec 19 (1). This authority of a partner to bind the firm is called his implied authority. It is subjected to the following conditions: The act done by the partner must relate to the normal business of the firm. The act must be such as is done to carry on the business of the firm in the usual way. The act must be such as is done in the name of the firm or in any other manner expressing or implying an intention to bind the firm.

MINOR AS A PARTNER
A minor as such is incapable of entering into a contract of partnership. But with the consent of all the partners he can be admitted to the benefits of a partnership for a time being. [Sec 30 (I) ] He can be a promisee or a beneficiary but he cannot be a promisor. There are two positions of a minor partner, 1) Before attending majority. 2) On attending majority.

Contd

Contd

Position before attaining majority: RIGHTS:


1)
a)

b)

c)

He have the right to share profit and property of the firm. He has access to the accounts but not the books of the firm. He has the right to file a suit for his share in the property of the firm. His liability is only confined to his share in the firm. He cannot be declared insolvent.

LIABILITIES:
a)

b)

POSITION AFTER ATTAINING MAJORITY




Liabilities: {A} - His liability is confined only to the extent of his share in the profits and property of the firm. Over and above this he is neither personally liable nor is he private estate liable. [ sec. 30 (3) ] {B} - He cannot be declared insolvent, but if the firm is declared insolvent his share in the firm vests in the Official Receiver or Official Assignee.

RECONSTITUTION OF A FIRM
Introduction of a new partner (Sec.31) Retirement of a partner (Sec.32) Expulsion of a partner ( Sec.33) Insolvency of a partner ( Sec. 34) Death of a partner (Sec.35) Transfer of a partners share (Sec.29)

DISSOLUTION OF A FIRM
Dissolution by agreement (Sec. 40): A firm may be dissolved; a. With consent of all the partners. b. In expiry of the agreement. o Compulsory Dissolution (Sec. 41) : A firm is compulsory dissolved; a. When any one of the partners become insolvent. b. Happening of any event which makes the firm unlawful.

Contd

Dissolution on Happening Of Certain Contingencies: a. Subject to contract among the partners firm is dissolved by a expiry of the term for which it was constituted. b. Completion of particular objective or event or adventure for which the firm was constituted. c. Death of a Partner. d. Adjudication of a partner as an insolvent.

Contd

BIBLIOGRAPHY

This project was completed under the guidance of our law teacher Mr. Arif. And very supportive reference from various books like N. D. Kapoor, D. K. Goel and various other books. Not to forget the precious help of our batch mates.

Thank You.