Meaning and Definition of Partnership -
Partnership is a special kind of Contract. Section 4 of the Indian Partnership Act 1932 defines "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.
Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm”, and the name under which their business is carried on is called the “firm name”.
Rights and Duties of Partners -
Rights and Duties of Partners in the Partnership firm are as follows -
Rights of Partners - Rights of Partners are as follows -
1. Right to take part in the conduct of the business [Section 12(a)] -
According to Section 12(a) of the Indian Contract Act, 1932 Every partner has a right to take part in the conduct of the business.
2. Right to be consulted [Section 12 (c)] -
According to Section 12(c) of the said Act, any difference arising as to ordinary matters connected with the business may be decided by a majority of the partners, and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in the nature of the business without the consent of all the partners.
3. Right to Access and inspect the books [Section 12(d)] -
According to Section 12(d) of the Indian Partnership Act, every partner has a right to have access to and to inspect and copy any of the books of the firm;
4. Right to Indemnify [Section -13(e)] -
According to Section 13(e) of the Indian Partnership Act 1932, the firm shall indemnify a partner in respect of payments made and liabilities incurred by him.
5. Right to Claim Remuneration, Profit and Interest on Capital Section 13(a) Section 13(b), Section 13 (c) and Section 13(d)] -
(a) a partner is not entitled to receive remuneration for taking part in the conduct of the business;
(b) the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm;
(c) where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits;
(d) a partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six percent. per annum;
Duties of Partners -
1. Duty to carry on business for common advantage (Section 9)
According to Section 9 of the Indian Partnership Act, 1932 General duties of partners Partners are bound to carry on the business of the firm to greatest common advantage, to be just and faithful to each other.
2. Duty to render true accounts (Section 9)-
According to Section 9 of the Indian Partnership Act, 1932 It is Duty of Partner to render true accounts and full information of all things affecting the firm to any partner, his heir or legal representative.
3. Duty to indemnify for loss caused by fraud (Section 10) -
According to Section 10 of the said Act, Every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.
4. Duty to attend Diligently [Section 12(b)] -
According to Section 12(b) of the said Act, every partner is bound to attend diligently to his duties in the conduct of the business.
5. Proper use of Partnership Firms Property [Section 15 and Section 16(a)] -
According to Section 15, Application of the property of the firm Subject to the contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purposes of the business. Section 16(a) if a partner 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 that profit and pay it to the firm.
1. Cox vs. Hickman (1860)
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3. Rights of Partners
4. Theories of Corporate Personality
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6. Distinction / Difference between Partnership and Co-ownership