partnership act

1. PRESENTED BY: -
HEMANT BATHAM
Indian institute of tourism and travel
management
Services 2010-12

2. PARTENERSHIP
• Section 4 of the Indian Partnership Act define
partnership as “ Partnership is the relation
between two or more persons who have agreed
to share the profits of a business carried on by
all or any of them acting for all.”
• The person who enter into such relationship are
called individually „partner‟

3. Partnership deed
Prepared for resolving mutual differences.
Usual content :-
• Date of Agreement
• Name and Address of the firm
• Name and address of the partners
• Nature of Business
• Duration of Partnership
• Capital invested by each partner
• Ratio to divide Profit and Loss

4. Characteristics Features of Partnership
• Two or more persons:-
• Agreement :-
• Business:-
• Sharing of profit:-
• Business carried on by all or any of them acting
for all.

5. Essential Elements of partnership
• Association of two or more person
 Max limit 10 for banking;20 for other business
• Results of an agreement
 Partnership relation based on contract.
 Implied or express(oral or written)
• Must carry on sum business
 Trade, occupation, profession
• Share profits or loss the business.
• Business is carried on by all or any one of them
acting for all

6. TYPES OF PARTNER
 ACTIVE OR OSTENSIBLE PARTNER
Engaged in actual conduct of the business
His acts binds the firm and other partner
Notice to be given in the case of retirement
 SLEEPING OR DORMANT PARTNER .
Does not take part in the conduct of business
Contribute his share of capital and enjoys profit
and losses
Not required to give notice in the case of
retirement .

7. No real interest in business, does not contribute any
capital, lends his name only
No share in profit but liable in third parties for all acts
of the firm
Share the profit but not losses
No interest in the management of the firm
Liability for the act of the firm is unlimited
 A sub partner comes into existence when one of the
partners agrees to share the profits derived by him
from the firm with a stranger .
 That stranger is called sub partner

8.  PARTNER BY ESTOPPEL
OR HOLDING OUT(section 28)
Representing him self as a partner by word spoken or
written or by conduct
Liable as a partner if credit is given to the firm based
on his representation . He can not deny.
If a partner does not give a public notice and his name
still used in the business . He is also liable to third
parties
 OUTGOING PARTNER OR RETIRING PARTNER
 A partner who leaves a firm in which the rest of the
partners continue to carry on business
 INCOMING PARTNER
1. A person who is admitted as a partner into an already
existing firm with the consent of all the existing
partners

9. RIGHT OF PARTNER
• Right to take part in conduct of business{sec.12(a)}
• Right to be consulted.{sec.12(c)}
• Right to have access to book{sec.12(d)}
• Right to share profit equally {sec.13(b)}
• Right to use partnership property{sec.15}
• Right to stop admission new partner{sec.31(1)}
• Right in emergency
• Right to retire{sec.32(1)}
• Right to share profit after retirement{Sec.37}
• Right not to be expelled{Sec 33}

10. Types of partnership
Partnership at Will
▫ No provision in contract between the partner for
1. Duration of partnership.
2. Determination of partnership.
▫ If any partner give notice of dissolution in writing,
the partnership is dissolved.

11. Particular partnership
•A person may become a partner with another
person in particular adventure or undertaking .
•On completion of such a venture ,a partnership
come to an end .

12. Illegal partnership
• By using a firm to carry `on an illegal business.
• Where the number of partner exceeds the
maximum limit. This has reference to Section 11
of the Companies act, 1956
Max limit for banking :- 10
Max limit for other business :- 20

13. Registration the firm
• Registration the firm means getting the
partnership firm registered with the registrar of
firms .
• Under the partnership act 1932, it is not
compulsory for a partnership firm to get itself
registered .
• However , by certain disabilities from which an
unregistered firm suffer , the law effectively
ensured registration of firms.

14. Effect of Non-Registration
• Suit between partner and firm : - A partner of an
unregister firm can not sue the firm or any other partner
of the firm to enforce a right
(a)Arising from a contract
(b) Conferred by partnership act
• Suits between firm and third parties :-
A Unregistered firm can not file to suit against a third
party to enforce any right arising from contract.
Ex. Such firm can not go to court for the recovery of the
price of goods supplied .
• Set-off
An Unregistered firm or any partner there of can not claim
a set-off in a proceeding institute against the firm by a
third party to enforce a right arising from a contract,
until the registration of the firm effected

15. Dissolution of a firm Model
Without the By order of the court
order of the court
By mutual Compulsory By Notice
agreement On happening of
dissolution (sec. 43)
Sec.40 certain contingencies
Sec.41
Sec.42
Insolvency all about one partner Business of the firm becoming unlawful
Insanity Permanent
Misconduct Persistent Transfer of Perpetual Any other just
incapacity Breach of interest loses and equitable
Agreement ground

16. Deference between Partnership and Co-ownership
Partnership Co-ownership
1. It arise from contract. It may , besides contract arise by
status.
2.It always implies a business It may exist without any business.
3.It involve sharing of profit and loss It does not always involve the sharing
of profit and losses because it may
exist without any business.
Each partner is the agent of every A Co-owner not the agent of the other
other partner co-owners.
A partner can not transfer his interest A co-owner may transfer his interest
without the consent of all other to third party without the consent of
partner. other co-owners.