Download - 01 - Partnership Act
Indian Partnership Act,1932
Gago's document
Essential Elements of Partnership
a) Two or more persons
b) Agreement
c) Sharing of Profits
d) Business e) Mutual Agency
Essential Elements of Partnership
Gago's document
TEST OF PARTNERSHIP [SECTION 6]
Cases where the Partnership Relation does not exist
a) Joint owners of some property sharing profits or gross returns arising from the property
[Leading case:; Govind Nair v. Maga]
b) Persons sharing the profits but not having mutual agency Mollow March & Co. v. The Court of
Wards
A widow or child of deceased partner who receives a share
of profits
A servant or an agent who receives a share of profits as part of his remuneration; and
[Munshi Abdul Latif v. Gopeshwar Chattoraj]
Gago's document
Distinction between Partnership And Co-Ownership
1. Agreement2. Business3. Profit and loss4. Mutual agency5. Name of the persons
involved
6. Maximum Limit
7. Transfer of Interest
8. Right to claim partition
9. Lien on property
Basis of distinction
Gago's document
Partnership and Hindu Undivided Family (HUF)
1. Agreement
2. Regulating Law
3. Name of the persons involved
4. Maximum Limit
5. Admission of new members
6. Minor members
7. Female members
8. Implied Authority
9. Liability of members
10. Right to demand accounts
11. Effect of death of a member
Gago's document
PARTNERSHIP AND COMPANY
Basis of distinction
1. Legal Entity
2. Liability
3. Tenure
4. Number of members
5. Transfer of interest
6. Agency
7. Distribution of profits
8. Management
9. Property
10. Audit
Gago's document
PARTNERSHIP AND CLUB
Basis of distinction
1. Objects
2. Number of members
3. Tenure
4. Agency
Gago's document
REGISTRATION
Is the Registration of Firm Compulsory?
a) No suit by a partner against the firm or the other partner [Section 69(1)]
b) No suit by the firm against third parties
[Section 69(2)]
c) No right to claim set off in excess of Rs. 100
[Section 69(3)]
Gago's document
Rights not Affected by Non-registration
a) Rights of unregistered firm or partners thereof
Right of a firm or partner of a firm having no place of business in India
i. Right to file a suit or claim of set-off if the value of suit does not exceed Rs.100 [Section 69(4)(b)]
ii. Right of a partner to sue
a) For the dissolution of the firm
b) For the accounts of a dissolved firm
c) For claiming share of the assets of a dissolved firm [Section 69(3)(a)]
b) Right of a third party to file a suit against the unregistered firm or partners thereof
c) Power of an Official Assignee or Receiver or Court to realise the property of an insolvent partner [Section 69(3)(b)]
Gago's document
Types Of Partners
Actual or Ostensible partner
Sleeping or Dormant partner
Partner by Estoppel
Partners in profits only
Sub-Partner
Gago's document
Partners by Estoppel or Holding out [Section 28(1)
He must have represented himself to be a partner by word spoken or written or by his conduct
The other person acting on the faith of such representation must have given credit to the firm.It is immaterial whether the person so representing to be a partner,is aware or not that the representation has reached the other person
Gago's document
Position of Minor as a partner
Rights
He has the right to share the profits and property of the firm in accordance with the agreement.
He has the right to have access to, and inspect and copy,any of the accounts of the firm.
He has the right to file a suit for his share of profits or the property of the firm when he is not given his due share of profits.However,he can exercise this right only when he decides to severe his connections with the firm
Gago's document
Liabilities
He is liable only to the extent of his share in his profits and the property of the firm.He is not personally liable to the third parties
He cannot be declared insolvent upon declaration of firm’s insolvency .
His share vests in the official receiver or Official Assignee.
Gago's document
Absolute duties Of Partner
To attend diligently
To equally contribute to the losses.
To indemnify the firm
To hold and use firm’s property for business purposes
To account for and pay the personal profits from transactions of firm etc.
To account for and pay the personnel profits from a competing business
Gago's document
Rights Of Partner
Right to take part
Right to express opinion
Right to have access to book
Right to share profits equally
Right to claim interest on advances
Right to be indemnified
Right to prevent the introduction of a new partner
Right to retireGago's document
Right not to be expelled
Right to carry on competing business
Right to share Subsequent profits
Right to dissolve the partnership
Gago's document
Liabilities of partner to third parties
Liability of a partner for acts of the firm
Liability of the firms for wrongful acts of partners
Liability of the
firm for misappropriation
by partners
Gago's document
Authority
Implied Express
Act should be done for carrying the business
In the firm name
In the usual way
Gago's document
Implied authority is available for the following acts
A. Buying and selling of gods,on behalf of the firm, in which the firm deals;
B. Receiving payments of the debts due to the firm and giving valid receipts for them
C. Contracting debts and paying debts on behalf of the firm
D. Setting accounts with person dealing with the firm.
Gago's document
E. Employing the servants for the partnership firm.
F. Drawing cheques,accepting or endorsing bills of exchange and promissory notes in the name of the firm
G. Pledging movable property of the firm
H. Suing on behalf of the firm and defending suits in the name of the firm
Gago's document
Implied authority is not available for the following
A. Submit a dispute relating to the business of the firm to arbitrations
B. Open a banking account on behalf of the firm in his own name
C. Compromise or relinquish any claim or portion of a claim by the firm.
D. Withdraw a suit or proceedings filed on behalf of the firm
E. Acquire immovable property belonging to the firm
F. Transfer immovable property belonging to the firm or
G. Enter into partnership on behalf of the firmGago's document
Reconstitution of a firm
(or) Dissolution of partnership
Insolvency of a partner
Liability of a incoming partner for firm’s acts done before his admission
Retirement of a partner
Expulsion of a partner
Introduction of a partner
Death of a partner
Gago's document
Dissolution of firm
By Agreement By Notice By Court By Contingency By Compulsion
Insanity
Permanent incapacity
Misconduct
Persistent breach of agreement
Transfer of interest
Continuous lossesJust and equitable
Gago's document
Public Notice [Section 72]
When a public notice is required to be given
On the retirement or expulsion of a partner
On the dissolution of the firm
On the election to become or not to become a partner by a minor on his attaining majority
Gago's document
When a public notice is not to be given
A public notice is not to be given in the following two cases
On the death of a partner
On the insolvency of a partner
Gago's document