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Rights and Liabilities of Parties

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Rights and Liabilities of Parties

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Relations of partners, Authority of partner, Liability of partner,
Rights of partner, Duties of partner, Partner by holding out or estoppel, Minor admitted as a partner, Reconstitution of a firm, Rights of an outgoing partner.

Relations of partners, Authority of partner, Liability of partner,
Rights of partner, Duties of partner, Partner by holding out or estoppel, Minor admitted as a partner, Reconstitution of a firm, Rights of an outgoing partner.

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Rights and Liabilities of Parties

  1. 1. Sedulous
  2. 2. Rights and Liabilities of Parties
  3. 3. Relations of parties to one another Determination of rights and duties of parties by contract between the parties: The mutual rights and duties of the partners of a firm may be determine by contract between the parties. Such contracts may be expressed or may be implied from the course of dealing of the firm. The partnership act lays down two general rules:  General duties of partners  Indemnity Sedulous
  4. 4. Relations of parties to one another Rights to take part in business. Every partner shall have the right to express his opinion. Sedulous Bound to attend diligently to his duties. Right to have access.
  5. 5. Relations of parties to one another Sedulous Not entitle to receive remuneration. Entitle to share profit and less equally Interest to be payable only out of profits. Interest at the rate of 6% . Firm indemnity a partner for payments and liabilities by him.
  6. 6. Relations of parties to one another If a person derives any profits, for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name, he shall account for the profit and pay it to the firm. If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in the business.
  7. 7. Relations of parties to one another Subject to contract between the partners, the relation between them is presumed to remain the same if the constitution of the firm changes for any reason, or if the firm was for a fixed period when business not included in the original contract is undertaken.
  8. 8. The Authority of a Partner Partner to be agent of the firm Subject to the provisions of this act, a partner is the agent of the firm for the purpose of the business of the firm.
  9. 9. The Authority of a Partner Express Authority Any authority which is expressly given to a partner by the agreement of partnership called express authority. Implied Authority Implied authority means the authority to bind the firm which arises by implication of law from the facts of partnership.
  10. 10. The Authority of a Partner a) Submit a dispute relating to the business of the firm. b) Open a banking account on behalf of the firm in his own name. c) Withdraw a suit on behalf of the firm. d) Admit any liability in a suit against the firm. e) Acquire immovable property on behalf of the firm. f) Transfer immovable property belonging to the firm. g) Enter into partnership on behalf of the firm.
  11. 11. Alteration of Authority The express or implied authority of a partner may be altered, extended, or restricted by agreement between the parties at any time.
  12. 12. Authority in an Emergency A partner has authority in an emergency, to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence.
  13. 13. Admission by Partner An admission or representation made by a partner concerning the affairs of the firm is evidence against the firm, if it made in the ordinary course of business.
  14. 14. Notice to a Partner Notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates as notice of the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.
  15. 15. Liability of partners to outsiders Every partner is liable, jointly with all the other partners and also severally for all acts of the firm done while he is a partner.
  16. 16. Liability of partners to outsiders Where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is cause to any penalty is incurred the firm is liable therefore to the same extent as the partner.
  17. 17. Liability of partners to outsiders Where, a) A partner acting within his apparent authority receives money or property from a third party and misapplies it, or b) A firm in the course of its business receives money of property from a third party, and the money or property is misapplied by any of the partners while it is in the custody of the firm, the firm is liable to make good the loss.
  18. 18. Rights of Partners Conduct of Business Can Express Opinion Access, Inspection, Copy Equality of Profits Interest on Capital Interest on Advance To Get Indemnity
  19. 19. Rights of Partners Application of Property of Firm Partner‘s Authority Power in an Emergency Reconstitution Dissolution Rights to Carrying on a Competing Business Rights to Share Profits Retirement
  20. 20. Duties of Partner Sec. 9- 13(b) Justice, Faithfulness, True Accounts To pay indemnity To attend diligently No remuneration Equality of losses Sec. 13(f)- 25 To pay indemnity for wilful neglect No private benefit To account for secret profit No secret profit Unlimited liability
  21. 21. Partnership by Holding Out or Estoppel A person may be liable for debts of a firm although he is not a partner. If a person, by words spoken or written, represent himself, to be a partner of a firm, he is liable as a partner.
  22. 22. Partnership by Holding Out or Estoppel 1 He represented himself as partner. 3 The other party on faith of that representation give credit to the firm. 2 Such representation occurred by words spoken or written.
  23. 23. Partnership by Holding Out or Estoppel Retired Partner A person who has retired from the firm but allows the use of his name may be liable to third party by the principle of holding out. Deceased Partner The legal representative of a deceased partner don’t liable for debts of the firm.
  24. 24. Minor Admitted as a Partner A minor can not enter into a contract of partnership because an agreement by a minor is void. The rights and liabilities of such a minor partner are governed by the following rules: 1. The minor has a right to such share of the property. 2. Access to and inspect and copy any of the account of the firm. 3. The minor is not liable for any act. 4. He can not file a suit against the other partners. 5. Within six months of his attaining majority, the minor may give notice that would he or not remain as member of the firm.
  25. 25. Minor Admitted as a Partner I. His rights and liabilities as a minor continue up to the date on which he becomes a partner. II. His share in the property and profits of the firm shall be the to which he was entitled as a minor.
  26. 26. Minor Admitted as a Partner I. His rights and liabilities continue to be those of a minor. II. His share is not liable for any acts. III. He is entitled to use the partners for his share.
  27. 27. Reconstitution of a Firm Incoming and outgoing partner The constitution of a firm may be changed by the introduction of a new partner, death, retirement, insolvency or by the transfer of share to an outsider. Introduce of a new partner A new partner can be introduced only with the consent of all the partner. Retirement of a partner A new partner may retired a) With the consent of all other partner b) In accordance with the teams of the agreement of partnership c) Where the partnership is at will Expulsion of a partner A partner can be expelled where: a) When the contract of the partnership contains a provision for expulsion b) The power to expel is exercised is good faith by the majority of partners c) The expelled partner has been given notice
  28. 28. Reconstitution of a Firm Insolvency of a partner When the partner of a firm is adjudicated an insolvent, he ceases to be a partner from the date on which the order of adjudicated was passed by the court. Death of partner Ordinarily the death of a partner has the effect of dissolving the firm. Transfer of a partner’s interest A partner may transfer his interest in a firm to an outsider. Sub-partnership The transferee of a partner’s interest in a firm is sometimes called sub-partner and the partnership a sub-partnership.
  29. 29. Rights of an Outgoing Partner Revocation of Guarantee A continuing guarantee given to a firm or to a third party in respect of the transactions of a firm is, in the absence of agreement to the contrary. To share Subsequent profit Where any member of a firm is died or otherwise ceased to be a partner, and the continuing partners carry on the business. The profit function is now discussing: Competing Business If there is no restraining agreement, an outgoing partner may carry on a business completing with that of the firm. Restraint of Trade By a special agreement among the partners, an outgoing partner may be prevented from carrying on a similar business.
  30. 30. Any Question ?
  31. 31. Thank You

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