Chapter-1

Fundamentals Of
Partnership
About the
Partnership
“According to Partnership
Act 1932, Section 4,
Partnership is the relation
between persons who have
agreed to share the Profits of a
business carried on by all or any
one of them acting for all.”
FEATURES OF PARTNERSHIP:
1. Two or More Persons: There must be atleast two persons to form a
partnership and all such persons must be competent to the contract
signed by the partners.
2. Agreement: Partnership comes into existence only on the basis of
contract or agreement which can be written or Oral.
3. Business: A partnership is established only to conduct a business.
4. Profit Sharing: The agreement between the partners should be to
share profits and losses in the agreed ratio or equally stated in the
contract.
5. Business can be carried by All or Any one of the partner Acting
for all: Partners in a partnership are agents of other partners as well as
the Principals.
 Rights Of Partners
Right to participate in the
management of Business.
Right to be consulted in the
business.
Right to inspect the books of the
firms.
Right to share profits equally or in
the agreed ratio based on the
contract.
Right to take Decisions for the
betterment of the business.
Right to Stop the admission of a
new partner in the business.
Right to Retire from the business
after an official notice.
Right to receive interest on loan if
advanced to the firm on the
agreed ratio.
 PARTNERSHIP DEED

Partnership Deed is an Agreement either written or on oral basis

agreed by all the partners to carry on the business.
It is an legal document which can be used to avoid any disputes
among the partners.
This document States the Description of Partners & Firm, Principal
place and Nature Of Business, Capital Contribution of Partners,
Profit Sharing Ratio, Renumeration To Partners, Salary &
Commission to Partners, Rights and Duties of Partners as well as
Settlement of Disputes among the partners.
Importance Of
Partnership Deed:
1. It governs the Rights, Duties
& Liabilities of Partners.
2. Disputes if any arises among
the partners can be solved
on the basis of partnership
deed.
What If there is no Partnership Deed?

If there is no partnership deed among the partners, Then The following

things must be remembered:
1. No Salary or Commission will be payable to partners.
2. If the firm has been advanced a loan by the partner and Rate of
interest if not specified then 6% is to be paid as the interest on loan
to partners by the firm.
3. If the firm advances loan to the partners with no rate of interest
specified then No interest amount is to be paid on the loan by the
partners to the firm.
4. No interest on Capital is to be allowed to partners.
5. No Interest on Drawing is to be charged from the partners.
 Liability Of Partners

A partner has willfully acted against the firm’s interest, he is liable

for any debts or damages so incurred and for loss suffered by the
Firm.
If A partner does not discharge his obligations under the
partnership agreement, he shall be liable for all damages suffered
by the company as a result of his wrongful act unless he proves
that he has not breached his obligations about partnership matters.
THANK YOU SIR
Name : Abhyansh Singhal
Class : 12th - C
Roll No. : 01