Partnership Act 1932

• Meaning of Partnership:
-It is an association of two or more persons to
carry on business,
-it will come in to existence by virtue of an
agreement called the Partnership Agreement
between the members,
-The agreement should consist the terms for
sharing the profits/losses, between the partners,
in the stipulated ratios,
-the business can be carried out by all the
partners or only by a few of them,
• Other characterstics;
- Unlimited liability;
-No separate legal entity,
-Utmost good faith,
-Restriction on transfer of interest
-Unanimity of consent,
• Formation of Partnership:
-All the essential elements of a valid contract must be there as it
based on agreement.
- Minor can be admitted as partner for the benefits of the partnership
-The agreement may express or implied. But , it is advisable to
create a written document to ward off disputes.
-No consideration is required for the formation of partnership as it an
extension of an Agency.
• Partners , Firm ,& Firm name,
 Partnership & other organisations
• Partnership & Club;
- Club does not carry any business,& is created for the social beneficial
objective,
-Registered under the Societies Act or the Companies act,
-The member is not an agent of the Club & cannot bind the club,
-death or resignation does not affect the club.
• Partnership & Company:
- Legal status ,
-Mutual Agency : Share holders are not the agents of the Company ,
-Liability of the members,
-Transfer of interest,
-Duration of existence,:
- Min & Max numbers :
• Partnership & HUF :
-Creation,
-Membership,
-Female Members,
-Minor members
-Death of a member,
- Mutual agency: Karta is the authority while other members have no authority,
• Duration of Partnership :
-for a fixed period,
- At Will,
-Particular partnership,
-Limited Partnership: In this type the liability of certain partners is
limited to the capital brought in by them. There will at least one
general partner whose liability is unlimited & one or more special
partner whose liability is limited. Mostly in existence in U S &
Europe . Now , it is known as L L P in India.
• Registration of Firms ;
• Effect of Non registration
-Suits between firm & third parties,
-Claim of set off,
-suits between partners & the firm