INDIAN PARTNERSHIP ACT 1932

Types of Partnership
Agreement between the partners and firm is the basis of formation of
partnership. This agreement may be written or oral. But written
agreement is always preferred. The agreement must satisfy all the
necessary elements of a valid contract.
The duration of a partnership depends upon the nature of agreement
between or among the parties.
1. Partnership at Will
2. Partnership for a fixed term
3. Particular Partnership.

1. Partnership at Will
There is no provision in the contract between the partners for the
duration of the partnership. Any partner can dissolve the firm by
giving notice to the other partners. If the partnership deed is silent
regarding the term of the partnership then such partnership is said to
be partnership at will.
There exist some important features of a partnership at will
a. No provision regarding duration of membership.
b. No provision for determination and termination of membership.
c. Is supposed to be a partnership for an indefinite period.
Section 7 of the IPA 1932 states that, “Where no provision is made by
contract between the partners for the duration of their partnership or
 for the determination of their partnership, this partnership is
partnership at will.”

2. Partnership for a fixed term

In this case, the partnership is entered into for a fixed period of time,
the completion of which entails the end of the partnership. The
partners can however continue even after the completion of the term,
upon which the partnership ceases to be partnership for a fixed term
and becomes partnership at will.
3. Particular Partnership.
When two or more persons agree to carry on business in particular
adventure of understanding, such a partnership is called a particular
partnership. Such partnerships are formed to carry on certain
ventures. If the partners agree to continue even after the completion
of the venture, then the particular partnership ceases to exist and is
replaced by partnership at will.

Mutual Relations of Partners

Right of Partners
1. Right to take part in the conduct of business.
2. Right to access of books
3. Right to interest on capital
4. Right to share profit
5. Right to interest on advances.
6. Right to be consulted
7. Right to indemnity
8. Right to use property
9. Right to prevent new admission
10. Right to retire
11. Right to protect the firm
12. Right to retain in the firm
13. Right to carry on competing business.
14. An incoming partner will not be liable for any debts or
liabilities of the firm before he becomes a partner.

Duties of Partners
1. Absolute duties
a. Duty to carry on business to the greatest common advantage
b. Duty to render true accounts
c. Duty to provide full information
d. Duty to be just and faithful to others
e. Duty to be liable jointly and severally
f. Duty to indemnity for loss caused by fraud
g. Duty not to assign his interests

2. Qualified duties
a. Duty to attend diligently to his duties
b. Duty to account for personal profit derived
c. Duty to contribute to losses
d. Duty to indemnify for wilful neglect
e. Duty to work without remuneration
f. Duty not to complete with the business of the firm
g. Duty to use firms property exclusively for the firm
h. Duty to work within the authority

3. Authority
 a. Implied authority of partner as agent of the firm
b. Extension and restriction of partner’s implied authority
c. Partner’s authority in an emergency

GENERAL DUTIES OF A PARTNER

Subject to a contract to the contrary between the partners the following
are the duties of a partner according to section 9 of The Indian
Partnership Act, 1932-
1-      To carry on the business of the firm to the greatest common
advantage. Good faith requires that a partner shall not obtain a
private advantage at the expense of the firm. Where a partner
carries on a rival business in competition with the partnership, the
other partners are entitled to restrain him.
2-      To be just and faithful. Partnership as a rule is presumed to be
based on mutual trust and confidence of each partner, not only in
the skill and knowledge, but also in the integrity, of each other
partner
3-      To render true accounts and full information of all things done
by them to their co-partners.
4-      According to sec. 10 of the said act every partner
shall indemnify for loss caused by fraud. Every partner shall
indemnify the firm for loss caused to it by his fraud in the conduct
of the business of the firm.
5-      Not to carry on business competing with the firm. If a partner
carries on any business of the same nature as and competing with
that of the firm, he shall account for and pay to the firm all profits
made by him in that business.
6-      To carry out the duties created by the contract. The partners are
bound to perform all the duties created by the agreement between
the partners.
  
 

RIGHTS AND DUTIES OF THE PARTNERS

Determination of rights and duties of partners by contract between the
partners:
Subject to the provisions of the Indian Partnership Act, the mutual rights
and duties of the partners of a firm may be determined by contract
between the partners, and such contract may be express or may be
implied by a course of dealing.  Such contract may be varied by consent
of all the partners, and such consent may be express or may be implied
by a course of dealing. [Section 11(1)].  Thus, partners are free to
determine the mutual rights and duties by contract. Such contract may be
in writing or it may be implied by their actions.
According to section 17 of the said act, rights and duties of partners is
subject to a contract between the partners:
1-      After a change in a firm- where a change occurs in the
constitution of a firm, the mutual rights and duties of the
partners in the reconstituted firm remain the same as they were
immediately before the change.
2-      After the expiry of the term of the firm- where a firm
constituted for a fixed term continues to carry on business after
the expiry of that term, the mutual rights and duties of the
partners remain the same as they were before the expiry, so far
as they may be consistent with the incidents of partnership at
will.
3-      Where additional undertakings are carried out- where a firm
constituted to carry out one or more adventures or undertakings
carries out other adventures or undertakings are the same as
those in respect of the original adventures or undertakings.
Subject to a contract to the contrary a partner has the following
rights.
1.      To take part in the conduct and management of the business
2.      To express opinion in matters connected with the business. He
has a right to be consulted and heard in all matters affecting the
business of the firm
3.      To have free access to all the records, books of account of the
firm and take copy from them.
4.      To share in the profits of the business. Every partner is entitled
to share in the profits in proportion agreed to between the parties.
5.      To get interest on the payment of advance. Where a partner
makes for the purpose of the business, any payment or advance
beyond the amount of capital he has agreed to subscribe, he is
entitled to interest thereon at the rate of 6% per annum.
6.      To be indemnified by the firm against losses or expenses
incurred by him for the benefit of the firm.
 
SPECIAL RIGHTS AND DUTIES OF THE PARTNERS
After the change of the firm-Where the change occurs in the constitution
of a firm, the mutual rights and duties of the partners in the reconstituted
firm remain the same.
 
                                                                                                       
MUTUAL RIGHTS AND LIBILITIES –
Subject to contract between the partners-
 
(a)      A partner is not entitled 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 per cent. Per annum;
 
(e)      The firm shall indemnify a partner in respect of payments
made and liabilities incurred by him-
 
(i)       In the ordinary and proper conduct of the business, and
 
(ii)      In doing such act, in an emergency, for the purpose of
protecting the firm from loss, as would be done by a
person of ordinary prudence, in his own case, under
similar circumstances: - and
 
(f)       A partner shall indemnify the firm for any loss caused to it
by his wilful neglect in the conduct of the business of the
firm.