NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

SEMESTER-2

Law of Contracts

Synopsis on: Mutual Relationship of Partners

An Analysis

Submitted By: Submitted to:

Divya Shree GN Asst. Prof. Neha Sharma

2021BALLB133
Introduction

The Partnership Act contains various provisions regulating the relationship between partners.
The partners are bound to carry on the business of the firm to the greatest common
advantage, to be just and faithful to each other and to render true account and true
information of all things affecting the firm to any partner or his legal representative. Every
partner has a right to take part in the conduct of the business. Every partner is bound to attend
diligently to his duties in the conduct of the business.

The mutual relations between the partners of a firm comes into existence through an
agreement between the said partners. This gives rise to mutual right and duties to every
partner involved in the firm’s business. Section 9 to 17 of the Indian Partnership Act of 1932
lays down the provisions governing the mutual relations of all the partners. These relations
are governed by an existing contract among them which may be implied or expressed by the
course of dealing. The agreement may vary depending on the consent of all the partners.

There are two rudimentary principles which govern the relation of partners to one another.
The first principle stays that all the partners in a partnership firm are free to form an
agreement with regard to their mutual rights and duties. Nonetheless, there are certain duties
mentioned in The Indian Partnership Act, 1932 which cannot be altered by entering into an
agreement to the contrary. Section 11 of the Act gives legislative recognition to this principle.

The second principle is of rudimental nature. It provides that the relation of partners to one
another is of the extreme good faith. It provides that each partner is an agent of each other;
therefore, the contract entered by one of the partners will bind each and every one the
partners. Thus, the relation of partners to one another is based on mutual trust and confidence.
The principle is acknowledged by Section 9 of the Partnership Act.

The Indian Partnership Act, 1935 has prescribed some provisions to govern the relationship
of partners amongst them, and these provisions are applicable if no partnership deeds exist.
Where partnership deed is an agreement or contract among the partners which determines
their rights and duties. It may differ by express or implied consent of partners.
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