2. Partnership Act 1932
• Section 4 of the Indian Partnership Act,
1932defines Partnership as the relation
between persons who have agreed to share
the profits of a business carried on by all
or anyone of them acting for all.
• The persons who enter into such
relationship are called ‘PARTNERS’
3. MEANING OF PARTNERSHIP:
Partnership is the relation between persons
who have agreed to share the profits of a
business carried on by all or any of them
acting for all.
4. CHARACTERISTICS OF PARTNERSHIP FIRM:
AGREEMENT.
NATURE OF AGREEMENT.
COMPETENCE TO ENTER INTO CONTRACT
NUMBER OF PARTNERS.
PRESENCE OF BUSINESS.
SHARING OF PROFITS.
6. Essential Elements of Partnership
• Association of two or more persons
• Max. limit : 10 for banking; 20 for other business
• Result of an agreement
• Partnership relation based on Contract.
• Implied or Express (Oral or Written)
• Must carry on some business
• Trade, Occupation or Profession
• Share profits of the business
• Business is carried on by all or any one of them acting for
all (mutual agency)
7. Mode of Creating Partnership
• Based on agreement
• Agreement may be express or implied
• In Writing : helpful in times of adversity
• Written agreement : “Partnership Deed”
• Essence of Partnership : Trust & Confidence
• Drafted with care and signed by all partners
• Stamped in accordance with Indian Stamp Act
• Firm should be registered and copy of the Deed to be
filed with the Registrar
8. 1.Right to take part in the conduct of the business
[sec.12 (a)]
2.Right to be consulted [sec.12 (c)]
3.Right of access to books [sec.12 (d)]
4.Right to share profit [sec.13 (b)]
5.Right to interest on capital sec.13 (c)]
6.Right to interest in advances [sec.13 (d)]
7.Right to indemnity [sec.13(e)]
RIGHTS OF PARTNERS
10. Absolute duties
1. Duty to carry on the business to the greatest common
advantage (sec.9)
2. Duty to be just and faithful intersect (sec.9)
3. Duty to render true accounts(sec.9)
4. Duty to provide full information(sec.9)
5. Duty to indemnify for loss caused by fraud(sec.10)
6. Duty to be liable jointly and severally(sec.25)
7. Duty not to assign his interest(sec.29)
11. Qualified duties
1. Duty to attend diligently to his duties [sec.12(b)]
2. Duty to walk without remuneration [sec.13(a)]
3. Duty to contribute to the losses [sec.13(b)]
4. Duty to indemnify for willful neglect [sec.13(f)]
5. Duty to use firm’s property exclusively for the firm
[sec.15]
6. Duty to account for personal profits derived [sec.16(a)]
7. Duty not to compete with the business of the firm
[sec.16(b)]
12. Types of Partnership
• General partnership
o Partnership at will
o Particular Partnership
• Limited partnership
15. Partnership and company
• Legal status
• Mutual agency
• Liability of members
• Transfer of interest
• Duration of existence
• Minimum membership
• Maximum membership
• Audit
16. Partnership & Joint Hindu family(JHF)
• Creations
• Admission
• Female member
• Minor member
• Death of member
• Mutual agency
• Liability
17. DISSOLUTION OF PARTNERSHIP AND FIRM
DISSOLUTION OF PATNERSHIP :
•Change in existing profit sharing ratio among partners.
•Admission of a new partner.
•Retirement of a partner.
•Death of a partner.
•Insolvency of a partner.
•Completion of venture, if partnership is formed for that; and
•Expiry of the period of partnership, if partnership is for a
specific period of time.
18. DISSOLUTION OF A FIRM :
1. Dissolution by agreement (sec. 40) : A firm may be
dissolved with the consent of all the partners or in
accordance with a contract between the partners.
Partnership is created by contract, if it can also be
terminated by contract.
2. Dissolution by notice (sec. 43) : In case of
partnership at will, the firm may be dissolved if any one
of the partners gives a notice in writing to the other
partners of his intention to dissolve the firm. The notice
given once cannot be withdrawn without the consent of
partners.
19. 3. ON THE HAPPENINF OF CERTAIN CONTINGENCIES
(SEC. 42): subject to contract between the partners, a firm is
dissolved:
a)if constituted for a fixed term, by the expiry of that term.
b)If constituted to carry out one or more adventures or
undertakings, by the completion thereof.
c)By the death of a partner.
d)By the adjudication of a partner as an insolvent.
4. COMPULSORY DISSOLUTION (SEC.41) : A firm is
dissolved compulsorily in the following cases:
a)When all the partners or all but one partner, becomes insolvent.
b)When the business of the firm becomes illegal.
20. 5. DISSOLUTION BY COURT (SEC. 44) : At the suit
of a partner the court may order a partnership firm to be
dissolved on any of the following grounds:
a)When the partner becomes insane.
b)When a partner becomes permanently incapable of
performing his duties as a partner.
c)When a partner is guilty of misconduct which is likely
to adversely affect the business of the firm.
