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Business Law GCT-2
Business Law GCT-2
Illustrations
Meaning
According to Section 4 of the Partnership Act,1932
A and B buy 100 tons of oil which they agree to sell for their
joint account. This forms a partnership and A and B are
considered as partners.
Case law
Sharing of Profits
The main goal of a company is to earn a profit. These profits
are shared in a pre-decided ratio among the partners.
Case law
Cox vs Hickman
In this case it was laid down that that the person sharing the
profit of a business do not always incur the liability of
partners unless the real relation between them is that of
partners.
The principal laid down in this case forms the basis of the
provisions of S.6 of the Indian Partnership Act, which gives a
caution that the presence of only some of the essentials of
partnership does not necessarily result in partnership. For
determining the existence of Partnership regard must be had
to the real relation between the parties, after taking all the
relevant facts into account.
Mutual Agency
Relations with a mutual agency means that all or any partner
must conduct a company’s business. A partner is an agent of
the other partner and can thus bind another partner through his
act. A partner is also principally responsible for the actions of
the other partners of the company.
Kinds of Partnership
Partnership at Will
If there is no clause to establish a partnership at the expiry of
such a partnership, it is referred to as a partnership at will. In
accordance with Section 7 of The Indian Partnership Act,
1932, two conditions have to be met for a partnership to be a
partnership at will and they are:
Case law
K. Jaggaiah vs Kokumanu
In this case the plaintiff and two defendants joined together
and obtained a contract for the maintenance of a road. There
was to be held to be partnership in the road building activity.
Such activity though arising out of a single contract was
spread over a particular period and the firm had to employ
certain workers, supervise the work, prepare the bills and
finalise the work and get the approval from the government
and finally receive the bills, and all that meant carrying on of
business.
Partnership for a Fixed Term
Now, during the establishment of a partnership, the partners
may agree on the duration of this arrangement. This would
mean that the partnership was established for a fixed period of
time.
General Partnership
When the purpose of forming the partnership is to carry out
the business in general, it is said to be a general partnership.