Subject Name: Law of Contract

Department of Law
Created By: Vishal Kumar Singh

JIMS Engineering Management Technical

Campus
48/4, Knowledge Park-III,Greater Noida - 201308
(Affiliated to Guru Gobind Singh Indraprastha University, New Delhi)
Subject: Law of Contract
Topic: Inter se Relationship of partners:
Judicial Interpretation
•What is Partnership?
•Section 4 of the Indian Partnership Act,1932 defines ‘Partnership’ as the relation
between persons who have agreed to share the profits of a business carried on by all
or any of them acting for all.

• Section 2(b) defines ‘business’ as including every trade, occupation and

profession. Persons who have entered into partnership with one another are called
collectively a ‘firm’.
The three minimum requirements of a partnership are:

▰ i) agreement to form a partnership.

▰ ii) agreement to share the profits of a business.

▰ iii) the business must be carried on by all the partners or any of them acting for

all.
▰ In Ashutosh v/s. State of Rajashtan , it is held that a partner is always
liable for partnership debts unless there is implied or express
restriction and a creditor is at liberty to recover the debt from any
one or more of the partners and that a notice to a partner is binding
on the firm because a partner stands as an agent in relation to the
firm and a notice to the agent tantamounts to a notice to the principal
and vice-versa.
▰ The Partnership Act contains various provisions regulating the relationship between
partners.

▰ 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

▰ Any differences arising as to ordinary matters connected with the business may be
decided by majority of the partners and every partner shall have the right to express
his opinion before the matter is decided

▰ No change can be made in the nature of the business without the consent of all the
partners. Every partner has a right to have access to and to inspect and copy any of
the books of the firm.
Duties of a Partner:
▰ Duty to act in good faith

▰ Duty to Render true accounts

▰ Duty to Indemnify for fraud

▰ Duty not to compete

▰ Duty to be Diligent

▰ Duty to properly use the property of the firm

▰ Duty to account for personal profits

Rights of a partner:
▰ The conduct of Business

▰ Right to be consulted

▰ Right of Access to book

▰ Right to Remuneration

▰ Right to share profits

▰ Interest Rights

▰ Right to Indemnity

▰ Right to indemnify the firm

Thank You !!