Business Law- II

Group- A14
Members:
HSBC0093 Prerna Varyani
HSBC0094 Ziyah Vastani
HSBC0095 Shiv Vaswani
HSBC0096 Shrishti Vora
HSBC0097 Ekta Wadhwa
HSBC0098 Hindavi Wagh
HSBC0099 Prajakta Waichal
Concept of Partnership

Introduction

 In a partnership, the partners are free to form an agreement and decide the mutual rights
and duties

 Relation of partners in the partnership is of utmost good faith, therefore, it is the duty of
every partner to work for the greatest common advantage of the firm and to work
diligently to avoid any loses to the firm.

 Mutual rights of the firm generally depend upon the provisions of the agreement but,
there are certain rights which are conferred by the act in the case when there is no
explicit agreement between the partners, these rights can be abrogated by entering into
an agreement to the contrary

 Objective of partnership is usually to Combine resources, skills, and expertise

& Achieve common business goals
Rights of Partner

As per companies Act, 2013

 Right to Take Part in the Conduct of the Business

Sec. 12(a) stipulates that each partner in a business partnership have the right to take part in the
business proceeding. But this right is subject to a contract to the contrary. However, this right
may be waived by a partner himself.

 Right to be Consulted
In case of matters affecting the business, each partner can has the right to be consulted. Further, every partner has the right to express
his views in front of other partners also. Sometimes, difference of opinion arises among the partners If it is over an ordinary matter, the
same may be settled by most of the partners

 Right to have Access to Books

Every partner in a business partnership can access and inspect any of the books of the firm as per law. It can be exercised either by the
partner himself or by his authorized agent.

 Right to Share Profits

Every partner is entitled to have equal share in the profits of the firm. At the same time, the partners are equally liable to all the losses
sustained by the firm unless otherwise agreed upon as per the partnership agreement.
Rights of Partner

 Right to Interest on Capital

Ordinarily, no interest is payable to the partners. However, if it is allowed by an express or implied agreement or by the custom of trade, a
partner can charge interest on capital. In such a case also, interest shall be paid only out of profits.

 Right to be Indemnified
The partner of a firm is entitled be indemnified by the firm in the following circumstances. Expenses incurred in the ordinary course of
business, and Expenses incurred in an emergency.

 Right not to be Expelled

Every partner has a right not to be expelled from the firm unless there is a clause in the partnership agreement that give power to the
majority of the partners to expel him in good faith.

 Right to the Use of the Partnership Property

In the absence of any contract to the contrary, each partner is presumed to have an equal share in the property of the partnership and is
entitled to have them held and used only for the purpose of the business. Partners should not use it as their own property. When at any point
of time, a partner uses the property of the business firm to his own benefit either directly or indirectly, the profits thus earned are accountable
to the firm
Duties of Partner

As per companies Act, 2013

Section 9: General duties of a partner

Partners are legally bound to carry on the business of the partnership firm. The general
responsibilities of a partner are listed below
A partner is required to carry on the business to the highest common advantage.
A partner is required to be just and faithful to each other. (Uberrima fidei)
A partner has to render to any other partner or his legal representative about the true account
and all the information of all the things affecting the partnership firm.

Section 10: To indemnify for fraud

According to Section 10, a partner of the partnership firm is liable to compensate the firm for any damages caused to its business or
the firm because of a partner's fraud in the conduct of the business of the firm.

Section 12(b) & Section 13(a)

To attend duties diligently without remuneration. According to Section 12(b) of the Indian Partnership Act, every partner is legally
bound to attend to his duties diligently to his duties relating to the conduct of the firm's business. Moreover, Section 13(a) enumerates
that a partner is not, however, generally entitled to remuneration for participating in the conduct of the business. A partner is also bound
to let his partners have the advantage of his knowledge and skill.
Duties of Partner

Section 13(f): To indemnify for willful neglect

According to the Section, a partner of a partnership firm must compensate the firm for any damages or loss caused to it by wilful
neglect in the conduct of the business of the firm.

Section 13(b): To share losses

All the partners of a partnership firm are liable to contribute equally to the injury sustained by the firm.

Section 16(a): To account for any profit

If a partner of a partnership firm derives any profit for himself for any transaction of the firm or from the use of the property or
business connection of the firm or firm's name, then the partner is bound to account for that profit and refund it to the firm.

Section 16(b): To account and pay for profits of competing for business
If a partner carries on a company of the same nature as the firm and competes with that of the
firm, the partner must be accountable for and nav to the firm all the
Case Laws

Dunne v. English (1874) Cragg v Ford (1842)

The plaintiff and the defendant bought a mine jointly
with a view to reselling it at a profit of pound 10,000.
Defendant resold the same to a company in which he
had interest at the much higher price. Whether plaintiff
is entitled to half the profit amount or only of 10,000
pound.
Court held that the defendant was duty bound to disclose
the real facts to the plaintiff. The other partners are not
deprived of their right to share the actual sale proceed.
A partner was given the charge to wind up the firm. He
delayed disposal of some bales of cotton even after suggestion
of a fellow partner. Subsequently the price of bales of cotton
fell considerably. Whether liable for willful neglect?
Court held that it was not a willful neglect only error of
judgment
Conclusion

 In a partnership, the partners are free to form an agreement and decide the mutual rights and duties.
Relation of partners in the partnership is of utmost good faith, therefore, it is the duty of every
partner to work for the greatest common advantage of the firm and to work diligently in order to
avoid any loses to the firm.

 Mutual rights of the firm generally depend upon the provisions of the agreement but, there are
certain rights which are conferred by the act in the case when there is no explicit agreement between
the partners, these rights can be abrogated by entering into an agreement to the contrary.

 While deciding the shares of the partners in a firm it becomes highly important to determine the partnership property. Theoretically
speaking, the partnership property is nothing but the joint property of all the partners.

 If there is any change in the constitution of the firm or if the partnership continues after the expiry of the term or undertaking for
which it was constituted, then it does not affect the mutual rights and duties of the partners
Bibliography

 Bare act of Indian Partnership Act, 1932

 Indian Kanoon.org

 MCA.gov.in
Thank you!