BOOK 3

The Law of Partnership

Chapter 1

The Nature of
Partnership
 The Essential Element of a
Partnership
 Definition and characteristics
 Definition
 According to partnership act- “partnership is
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.”
 The Essential Element of a
Partnership
 Definition
 Partnership is the relation which subsists
between persons carrying on business on
common with a view to profit.– British
Partnership Act, 1980.
 Partnership is an association of two or more
persons to carry on as co-owners a business
for profit.---Uniform Partnership Act.
 The Essential Element of a
Partnership
 Definition and characteristics
 Characteristics
1. Voluntary Agreement

2. Sharing of Profits of a Business

3. Mutual Agency
 Who can be partner
 Person
 Minor
 Person of unsound mind
 Woman
 Company
 An alien enemy
 Topic
 Partnership forbidden by law
 Number of partners:
 More than 10 persons for business of banking
 More than 20 persons for other business
 A company must be formed if the number of
partners is more than 10 and 20 for banking and
other business respectively.
 An agreement to form partnership for the
purpose of carrying illegal trade or prohibited
trade, is void.
 Topic
 Some definition
 Firm, firm-name, partner
 The legal status of a firm
 Classes of partner
 Active partner
 Dormant, sleeping or nominal partner
 Sub-partner
 Name of partnership
 Name of partnership
A firm name shall not contain any of the following words, namely:
 State or words expressing or implying the sanction, approval or
patronage of the Government or of the Bangabandhu, except
when the Government signifies its consent to the use of such
words as part of the firm name by order in writing. 
 A firm name shall not contain the name of the "United Nations"
or its abbreviations through the use of its initial letters or of any
subsidiary body set up by that body unless it has obtained the
previous authorization of the Secretary-General of the United
Nations in writing. 
 A firm name shall not contain the name of the "World Health
Organization" or its abbreviations through the use of its initial
letters unless it has obtained the previous authorization of the
Director-General in writing.
 Topic
 Some definition
 Classes of partnerships
 Partnership-at-will
 Particular partnership- joint venture
 Limited partnership
 Partnership property
 Goodwill
 The partnership agreement
 Topic
 Registration of firms
 Registration is not compulsory but necessary.
 Formalities for registration
 Time for registration: firm can be registered at
any time.
 Appointment of Registrars
 The government may appoint registrars of firms for the
purposes of this act, and may define the areas within which
they shall exercise their powers and perform their duties. 
 Every registrar shall be deemed to be a public servant
within the meaning of section 21 of the [Penal Code].
 Topic
 Consequences of non-registration:
 Cannot file a suit for enforcing rights
 Unregistered firm cannot file suit against any third party
 Cannot claim a set-off in a suit
 Exception to the rules:
 Can file a suit for the dissolution of the firm and for
accounts
 Can file suit for the realisation of the properties of dissolved
firm
 Official assignee can realise properties of an insolvant
partner of unregistered firm
 Can claim set-off for sum not exceeding tk 100 in value
 Mode of determining existence
of partnership
 In determining whether a group of persons is or is not a
firm, or whether a person is or is not a partner in a firm,
regard shall be had to the real relation between the parties,
as shown by all relevant facts taken together. 
 Explanation 1.The sharing of profits or of gross returns
arising from property by persons holding a joint or common
interest in that property does not of itself make such
persons partners. 
 Explanation 2.The receipt by a person of a share of the
profits of a business, or of a payment contingent upon the
earning of profits or varying with the profits earned by a
business, does not of itself make him a partner with the
persons carrying on the business; 
 Mode of determining existence
of partnership
 and, in particular, the receipt of such share or
payment- 
 (a) by a lender of none to persons engaged or about

to engage in any business, 

 (b) by a servant or agent as remuneration, 

 (c) by the widow or child of a deceased partner, as

annuity, or 
 (d) by a previous owner or part owner of the business,

as consideration for the sale of the goodwill or share

thereof,  does not or itself make the receiver a partner
with the persons carrying on the business.
Chapter 2

Right and Liabilities of

Partner
 Topic
 Determination of right and duties of partners by
contract between the partner.
 Two general rules regarding the conduct of the
partners to one another.
 General duties of partners
 Indemnity
 The authority of a partner
 Agency
 Express authority
 Implied authority
 Limitation of a partner’s implied authority
 Topic
 The authority of a partner
 Alteration of authority
 Authority in an emergency
 Liability of partners to outsiders
 Liability of a partner for act of firm,
 Liability of the firm for wrongful acts of a partner
 Liability of the firm for misapplication by partners
 Topic
 Rights of partners:
 Conduct of business
 Can express opinion
 Access, inspection, copy
 Equality of profits
 Interest on capital
 Interest on advance
 To get indemnity
 Topic
 Rights of partners:
 Application of property of firm
 Partner’s authority
 Power in an emergency
 Reconstitution
 Dissolution
 Right to carrying on a competing business
 Right to share profits after retirement
 Duties of partners
 Justice, faithfulness, true accounts , full information
 To pay indemnity
 To attend diligently
 No remuneration
 Topic
 Duties of partners
 Equality of losses
 To pay indemnify for wilful neglect
 No private benefit
 To account of secret profit
 No secret profit
 Unlimited liability
 Partnership by holding out or estoppel
 Reconstitution of a firm
 Transfer of a partner’s interest
Chapter 3

Dissolution of Firms
 Topic
 What is dissolution of a firm
 The grounds of dissolution of a firm
 By agreement
 Compulsory dissolution
 On the happening of certain contingencies
 By notice
 Topic
 The grounds of dissolution of a firm
 Dissolution by the court

 Insanity
 Permanent incapacity
 Guilty conduct
 Persistent breach of contract
 Transfer of whole interest
 Loss
 Just and equitable clause
 Mode of settlement of accounts between partners
 Case Assignment

 Page no: 269, Problem 10 (a-c)

 Link
 THE PARTNERSHIP ACT, 1932 
 http://bdlaws.minlaw.gov.bd/act-details-157.html