Indian partnership Act 1932

1. Presenter
Pankaj Rao
B.Com ( Honours )
II Semester

2. 
Content
 Definition of Partnership
 Essentials element of partnership.
 Kinds of partners
 Types of partnership
 Rights of partner
 Partnership Deed
 Difference Between Partnership firm and Company

3. 
Definition of partnership
( Acc. to Partnership Act 1932 )
“ Partnership is the relation between persons
who have agreed to share the profits
of a business
carried on by all or any one of them acting for all. ”

4. 
“ A business organization in which two or more individuals
manage and operate the business.
Both owners are equally and personally liable for the debts from
the business. “
4
Other Definition

5. 
Essential elements of partnership:
 Association of two or more persons
 Partners must be competent
 There must be existing business
 Contract may be Expressed or implied
 Sharing of profits
 Prevalence of mutual agency.

6. 
Kinds Of Partners
There may be different kinds of partners in a
partnership firm. The important classification of
partners is given below.
 Actual or active partners,
 Dormant or sleeping partner,
 Nominal partner,
 Partner in profits only .

7. 
Types Of Partnership
 Partnership at will-
Where time is not mentioned in agreement
 Particular partnership –
Partner in a specific venture only
 Partnership for fixed term

8. 
Rights Of Partners
 Rights to take part in management
Every partner has a right to take part in the conduct of the business.
 Rights to inspect books
Every partner has a right to check the books of account of the firm and to get the
copies.
 Rights to be consulted
Every partner has a right to be consulted and heard before any matter is decided.
 Rights to share profit
Every partner has a right to share equally in the profits earned by the firm,
irrespective of his amount of capital contribution.

9. 
 Rights to interest on capital
A partner is not entitled to receive interest on capital contributed by him..
 Right to use property
Every partner of the firm is co-owner in the property of firm and he has a right
to use it for the best benefit of the business of the allowed.
 Rights to admit and expel partner
A new partner cannot be admitted in the firm and an old partner cannot be
expelled from the firm without the prior consent of all the partners.
 Right to give opinion
Nature of the partnership business cannot be altered without the prior approval
of all the partners.
Rights Of Partners

10.  Right to collect debts
A partner has an implied right to collect partnership debts and to give receipts for
payments.
 Right to act as agent
Every partner can act as an agent on behalf of the remaining partners and bind the
other partners to his act.
 Rights of retirement
Every partner has a right of retirement from the firm with the mutual consent of
all other partners. But when the partnership is at will, he can leave the firm at
any time while giving a due notice of his retirement from the firm.
 Right of competing business
Any outgoing partner has a right to start a business competing with that of the
firm but he cannot use the name of the firm.
Rights Of Partners

11. 
 Right to Interest on Loan
 Right not to expelled
11
Rights Of Partners

12. 
There are few cases where an individual has the right to get
profit of the business but he/she is not the partner in a firm
 Property Owner
 Money Lender
 Employ
 Widow
 Sale of goodwill
12
Exceptions

13. 
Partnership Deed
Partnership Deed is the document that defines the
rights and obligations of partners.
Besides names, address and occupation of partners it
lays down the duration of partnership, nature of
business, profit sharing ratio, right to interest, salary,
commission etc.

14. 
Partnership Deed
A partnership deed should contain the following clause
 Name of the parties
 Nature of business
 Duration of partnership
 Name of the firm
 Capital
 Share of partners in profits and losses
 Banking, Account firm
 Books of account
 Powers of partners
 Retirement and expulsion of partners
 Death of partner
 Dissolution of firm
 Settlement of disputes

15. 
Effects of non Registration
 No suit in a civil court by a partner against the firm or co partner
 No suit in civil court against third parties
 Firm or partners cannot make claim to set off other proceeding based upon a contract

16. 
Difference between partnership and Company
 Regulating act
 Number of members
 Entity
 Liability
 Authority of members
 Audit
 Registration
 Ownership of the property