Rights , Duties &Liabilities of partners , of one partner to another partner and partners to a partnership firm under Indian Partnership Act.

1. Presentation on-
RIGHTS,DUTIES AND LIABILITIES
OF PARTNERS IN PARTNERSHIP
BY-SHIVANI TIWARY
2019-47
BA .LLB (Sem II)
DAVV

2. SERIAL
NO .
TITLE
1. INTRODUCTION .
2. RIGHTS OF PARTNERS .
3. DUTIES OF PARTNERS .
4. LIABILITIES OF PARTNERS .
5. CASE LAWS .
6. CONCLUSION .
7. BIBLIOGRAPHY .

3. INTRODUCTION
In a partnership, the partners are free to form an agreement and decide the
mutual rights and duties. Relation of partners in the partnership is of utmost
good faith, therefore, it is the duty of every partner to work for the greatest
common advantage of the firm and to work diligently in order to avoid any
loses to the firm.
Mutual rights of the firm generally depend upon the provisions of the
agreement but, there are certain rights which are conferred by the act in the
case when there is no explicit agreement between the partners, these rights
can be abrogated by entering into an agreement to the contrary.
While deciding the shares of the partners in a firm it becomes highly
important to determine the partnership property. Theoretically speaking, the
partnership property is nothing but the joint property of all the partners.
If there is any change in the constitution of the firm or if the partnership
continues after the expiry of the term or undertaking for which it was
constituted then it does not affect the mutual rights and duties of the
partners.

4. Rights of a Partner:
1. Right to Take Part in the Conduct of the
Business
• Sec. 12(a) stipulates that each partner in a
business partnership have the right to
take part in the business proceeding. But
this right is subject to a contract to the
contrary. However, this right may be
waived by a partner himself.
2. Right to be Consulted
• In case of matters affecting the business,
each partner can has the right to be
consulted. Further, every partner has the
right to express his views in front of other
partners also. Sometimes, difference of
opinion arises among the partners. If it is
over an ordinary matter, the same may be
settled by a majority of the partners,
whereas if it is over a fundamental matter,
it can be settled only with the consent of
all the partners.
3. Right to have Access to Books
• Every partner in a business partnership
can access and inspect any of the books of
the firm as per law. It can be exercised
either by the partner himself or by his
authorized agent. The partners cannot
object to inspection of books by the agent
of a partner, unless they have a
reasonable ground for believing that the
trade secrets might be leaked out.
4. Right to Share Profits
• Every partner is entitled to have equal
share in the profits of the firm. At the
same time, the partners are equally liable
to all the losses sustained by the firm
unless otherwise agreed upon as per the
partnership agreement.

5. 8 . Right to the Use of the Partnership
Property
• In the absence of any contract to the
contrary, each partner is presumed to
have an equal share in the property of
the partnership and is entitled to have
them held and used only for the
purpose of the business. Partners should
not use it as their own property.When at
any point of time, a partner uses the
property of the business firm to his own
benefit either directly or indirectly, the
profits thus earned are accountable to
the firm.
9 . Power in an Emergency
• As per the Indian Partnership Act, a
partner is vested with the powers to
initiate action to safeguard the firm from
loss.
5 . Right to Interest on Capital
• Ordinarily, no interest is payable to the
partners. However, if it is allowed by an
express or implied agreement or by the
custom of trade, a partner can charge interest
on capital. In such a case also, interest shall be
paid only out of profits.
6 . Right to be Indemnified
• The partner of a firm is entitled be
indemnified by the firm in the following
circumstances:
• Expenses incurred in the ordinary course of
business, and
• Expenses incurred in an emergency.
7 . Right not to be Expelled
• Every partner has a right not to be expelled
from the firm unless there is a clause in the
partnership agreement that give power to the
majority of the partners to expel him in good
faith.

6. Duties of a partner:
• Section 9: General duties of a partner
• Partners are legally bound to carry on the
business of the partnership firm. The general
responsibilities of a partner are listed below :
• A partner is required to carry on the
business to the highest common advantage.
• A partner is required to be just and faithful
to each other. (Uberrima fidei )
• A partner has to render to any other partner
or his legal representative about the true
account and all the information of all the
things affecting the partnership firm.
• Section 10: To indemnify for fraud
• According to Section 10, a partner of the
partnership firm is liable to compensate the
firm for any damages caused to its business
or the firm because of a partner’s fraud in
the conduct of the business of the firm.
• Section 12(b) & Section 13(a): To attend
duties diligently without remuneration
• According to Section 12(b) of the Indian
Partnership Act, every partner is legally
bound to attend to his duties diligently to
his duties relating to the conduct of the
firm’s business. Moreover, Section 13(a)
enumerates that a partner is not, however,
generally entitled to remuneration for
participating in the conduct of the business.
A partner is also bound to let his partners
have the advantage of his knowledge and
skill.
• Section 13(f): To indemnify for willful
neglect
• According to the Section, a partner of a
partnership firm must compensate the firm
for any damages or loss caused to it by
willful neglect in the conduct of the
business of the firm.

7.  Section 13(b): To share losses
 All the partners of a partnership firm are
liable to contribute equally to the injury
sustained by the firm.
 Section 16(a): To account for any profit
 If a partner of a partnership firm derives any
profit for himself for any transaction of the
firm or from the use of the property or
business connection of the firm or firm’s
name, then the partner is bound to account
for that profit and refund it to the firm.
 Section 16(b): To account and pay for
profits of competing for business
 If a partner carries on a company of the
same nature as the firm and competes with
that of the firm, the partner must be
accountable for and pay to the firm all the
profits made in the business by the partner.
The partnership firm will not be held liable
for any losses caused in the business.

8. Liabilities of a partner:
1. Liability of a partner for acts of the firm:
Every partner is jointly and severally liable for all acts of the firm done while he is a partner.
Because of this liability, the creditor of the firm can sue all the partners jointly or individually.
2. Liability of the firm for wrongful act of a partner:
If any loss or injury is caused to any third party or any penalty is imposed because of wrongful
act or omission of a partner, the firm is liable to the same extent as the partner. However, the
partner must act in the ordinary course of business of the firm or with authority of his.
3. Liability of the firm for misutilisation by partners:
Where a partner acting within his apparent authority receives money or property from a third
party and misutilises it or a firm receives money or property from a third party in the course of
its business and any of the partners misutilises such money or property, then the firm is liable
to make good the loss.
4. Liability of an incoming partner:
An incoming partner is liable for the debts and acts of the firm from the date of his admission
into the firm. However, the incoming partner may agree to be liable for debts prior to his
admission. Such agreeing will not empower the prior creditor to sue the incoming partner. He
will be liable only to the other co-partners.

9. CASE LAWS
5. Liability of a retiring
partner:
A retiring partner is liable for
the acts of the firm done
before his retirement. But a
retiring partner may not be
liable for the debts incurred
before his retirement if an
agreement is reached
between the third parties
and the remaining partners
of the firm discharging the
retiring partner from all
liabilities. After retirement
the retiring partner shall be
liable unless a public notice
of his retirement is given. No
such notice is required in
case of retirement of a
sleeping or dormant partner
…

10.  In Pullin Bihari Roy v. Mahendra Chandra Ghosal, there was a partnership for buying
and selling of the salt. One of the partners while buying the salt for the firm, bought
some quantity of salt for himself and then gained profit by selling it on his personal
account. He was held to be liable to account to his co-partners for the profits earned.
However, a partner can carry on any business which is outside the scope of the business of
the firm.
 In Law v. Law,[4] it was held by the court that if a partner is in possession of some
extra information then he is bound to deliver it to the co-partners. If the partner enters
into a contract with other co-partners without furnishing them the material details
which is known to him but not his co-partners then such a contract is voidable.

11. • Facts of the case --
In this case, Mr. Smith and his son were carrying on partnership business as 'M/s.
Smith and son. Owing (due) to financial difficulties, they assigned the business to their
creditors and executed an agreement/ document to the effect. According to the
agreement, the business was to be managed by five trustees representing the
creditors under the name of 'Stanton Iron Co'. The trustees include Cox and Haywood.
The net income/profit (after paying off the creditors) was to be distributed by the
trustees. After all the creditors had been paid off, the business had to be re transferred
to M/s. Smith and son. The creditors were empowered to discontinue the business or
to make rules for conducting the business. While the business was being managed by
the trustees, Hickman, plaintiff in this case supplied goods to the firm (and draw a bill ,
which was accepted by Haywood I.e. Haywood had undertaken to pay) Cox did not
accept the trusteeship and did not take part in the transaction. Hickman sued the firm
for payment treating Cox and Haywood as partners.
Judgment ---
The House of Lords Held that there was no partnership and Cox was not liable. Lord
Cranworth held that participation in profits is not the decisive test of a partnership.
The true test is, whether there exists 'mutual agency' between/among the partners.
COX V HICKMAN (1860)

12. CONCLUSION
In a partnership, the partners are free to form an agreement and decide the mutual
rights and duties. Relation of partners in the partnership is of utmost good faith,
therefore, it is the duty of every partner to work for the greatest common advantage
of the firm and to work diligently in order to avoid any loses to the firm.
Mutual rights of the firm generally depend upon the provisions of the agreement
but, there are certain rights which are conferred by the act in the case when there is
no explicit agreement between the partners, these rights can be abrogated by
entering into an agreement to the contrary.
While deciding the shares of the partners in a firm it becomes highly important to
determine the partnership property. Theoretically speaking, the partnership
property is nothing but the joint property of all the partners.
If there is any change in the constitution of the firm or if the partnership continues
after the expiry of the term or undertaking for which it was constituted then it does
not affect the mutual rights and duties of the partners.

13.  ~ Bare Act of Indian patrnership Act,1932 .
 ~ www.preservearticles.com .
 ~ blog.ipleaders.in .
 ~ IndianKanoon.org .