The slides in the presentation talk about the Indian Partnership act 1932. It explains the various types of partners, types of partnerships, rights and duties of partners, minor as a partner, registration and dissolution of partnership firm.

1. Indian Partnership Act 1932

2. Partnership – Definition
• Partnership is the relation between persons
who have agreed to share profits of a business
carried on by all or any of them acting for all
• Partners shares losses too [except in some
cases]

3. Essential Elements of a Partnership
• The following are the essential elements of a
partnership:
 An Agreement
 Two or more persons
 Caring on a Business
 Sharing Profits
 Unlimited Liability
 Mutual Agency

4. An Agreement
• Partnership is a result of an agreement
• The agreement may be expressed [written or
oral] on implied
• E.g. partnership deed is an example of written
partnership agreement

5. Two or more Persons
• Partnership must have at least two persons.
• Maximum number of persons in a partnership
agreement has not been defined in the act
• According to the Companies Act 2013, the
maximum number of partners in a partnership
firm can be 100

6. Carrying on a Business
• For a partnership to exist, it is important that
there should be a business
• Business includes trade, occupation,
profession
• It maybe a long term business activity or a
short term

7. Sharing Profits
• Partners may share profits according to the
proportion that they mutually decide.
• However, when there is a loss, the partners
have to share the losses too, since losses
represent negative profits

8. Unlimited Liability
• Normally, in partnership the partners have
unlimited liability
• If any of the partner run away after committing
an act of fraud, the other partner will be held
responsible for the same

9. Mutual Agency
• This means that each partner acts as the agent
of other partners
• Also, each partner is a principal for he is
bound by the acts of other partners

10. Partner, Firm and Firm Name
• Persons who have entered into partnership
with one another are individually called
partners
• Persons who have entered into partnership
with one another are collectively called firm
• Name under which there business is carried on
is called firm name

11. Nature of partnership firm
• The partnership firm doesn’t have a separate
legal identity apart form the persons
constituting it
• It is not a person in the eyes of the law

12. Types of Partnership

13. Types of Partnerships
• Partnership at will: is formed for an indefinite
period of time and can exists on the will of the
partners. It can be brought to an end when any
of the partners gives notice of his intention to
do so
• Particular Partnership: particular partnerships
is formed for undertaking a particular venture.
It comes to an end with the completion of the
venture

14. Types of Partnerships
• Limited Liability Partnership: Under the LLP
act, partnership with limited liability can be
formed.
• This gives the advantages of partnership as
well as limited liability. The partner can avoid
the numerous legal formalities required in case
of formation of a company

15. Types of Partnerships
• LLP consists of one or more general partners
with unlimited liability and one or more
special partners with limited liability
• Special partners do not take part in day to day
business. Their death or bankruptcy does not
dissolve the firm. They cannot withdraw any
part of capital contributed to the firm.

16. Types of Partners

17. Types of Partners in Partnership
• The following are the main type of partners:
Active partner or working partner: An active
partner is one who participates in the day to
day business
Sleeping or ‘dormant’ partner: sleeping partner
is one who does not participates in day to day
business
Partner in profits only: A partner who gets a
share only in profits but does not share loss.

18. Types of Partners in Partnership
• The following are the main type of partners:
Secret Partner: A secret partner is one whose
partnership is kept hidden from the public.
Limited Partner or silent partner: a partner who
has only a limited liability in the firm is called
a limited partner. [LLP – Limited Liability
Partnership]

19. Rights of a Partner

20. Rights of a partner
• The following are the important rights of a
partner in a firm:
Right to take part in a business: every partner
has the right to take part in the business
Right to be consulted: every partner has the
right to be consulted before any decision is
taken
Right to access accounts: partner has the right
to inspect and copy books of the firm

21. Rights of a partner
• The following are the important rights of a partner
in a firm:
Right to share in profits: partners are liable to
proportional share in profits losses
Right to use partnership property for business:
The partners can use the property of the
partnership for business purpose only and not for
individual purpose
Right to no liability before joining: a person who
joins a firm as a partner is not liable for act of the
firm before he became partner

22. Rights of a partner
• The following are the important rights of a
partner in a firm:
Right to interest on Advances: if a partner
gives advance to the firm, beyond the amount
of capital, he is entitled to receive interest
Right to Retire: a partner can retire by i. the
consent of all partners ii. By giving notice to
the firm in case of partnership at will & iii.
According to the terms & conditions of the
partnership agreement

23. Duties of a Partner

24. Duties of a partner
• Partnership is a contract of uberrimae fidea
which means that the partners must act in good
faith.
• The very basis of partnership is mutual trust
and confidence
• The major duties of a partner are listed as
under:
To carry on the business to greatest common
advantage: a partner must do his best in the
business for interest of the firm.

25. Duties of a partner
• The following are the important duties of a
partner in a firm:
To observe faith: every partner should be
honest and faithful towards other partners. He
should not derive any private advantage.
To attend diligently: every partner must attend
his day to day tasks diligently and use his
skills to the greatest common advantage of the
firm

26. Duties of a partner
• The following are the important duties of a
partner in a firm:
Not to claim remuneration: a partner should
not claim remuneration, he is entitled to share
in profit
To share losses: a partner is liable to share
losses also and not only profits.
To use property of the firm only for business
purpose: a partner must use firm’s property for
business objective only

27. Duties of a partner
• The following are the important duties of a
partner in a firm:
Not to carry on competing business: a partner
should not conduct any business which is
competing to firm’s business
To act within authority: a partner is bound to
act within the scope of his authority. He
shouldn’t exceed it.

28. Minor as a Partner

29. Minor as a partner
Section 30 of Indian partnership act states that
though a minor cannot be a partner in a firm,
but with the consent of all partners and for the
time being, he may be admitted to the benefits
of partner through an agreement executed
through his guardians.
Consent of all partners is important before
inducting minor as a partner in a firm

30. Minor as a partner
He is entitled to share in profits. He has the
right to inspect the books of accounts only.
Minor partner is not allowed to take part in the
day to day business
On attaining the age of majority, within six
months he has to declare whether he wants to
continue in the firm or leave the firm

31. Minor as a partner
In case he doesn’t declare anything within six
months after attaining the age of majority, it is
deemed that he want to remain a partner in the
firm

32. Doctrine of Implied Authority

33. Doctrine of Implied Authority
Implied authority refers to an agent with the
jurisdiction to perform acts that are reasonably
necessary to accomplish the purpose of an
organization.
Section 19 of the Indian Partnership act
explains the implied authority of partner as an
agent of a firm
The authority of a partner to carry on the usual
business of a firm as is agent is called ‘implied
authority’

34. Doctrine of Implied Authority
Implied authority of a partner does not allow
him to:
Open a bank account on behalf of the firm in
his own name
Withdraw a case filed on behalf of the firm
Acquire immovable property on behalf of the
firm
Transfer immovable property on behalf of the
firm
Enter into partnership on behalf of the firm

35. Registration of Firms

36. Registration of Firms
Registration of firms is done with the registrar
of firm [Government of the state]
Registration of a firm is not compulsory
However, unregistered firms are put to certain
disadvantages, thus making it desirable to
register a firm
A firm may be registered anytime, at the time
of formation or afterwards

37. Dissolution of Firms

38. Dissolution of Firms
Dissolution of firm is the situation in which all
the partners of the firm agree to severe [end]
their relationship to each other.
Dissolution of the firm may happen in two
ways:
Dissolution without court’s order
Dissolution with court’s order

39. Dissolution Without Court’s order
Dissolution without court’s order can happen
in the following ways:
i. Dissolution by agreement
ii. Any event which makes it impossible to carry
on firm’s business e.g. unlawful activity
iii. On partner’s becoming insolvent
iv. On death of a partner / partners
v. In case of partnership at will, the firm may be
dissolved by serving notices to other partners

40. Dissolution With Court’s order
The court may dissolve the firm in the
following cases:
i. One or more partners have become of
unsound mind
ii. The business of a firm cannot be carried on
except at a loss
iii. In case one or partners sues the firm in the
court for an illegal or unlawful activity