01 - partnership act

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Indian Partnership Act,1932 Gago's document

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Page 1: 01 - Partnership Act

Indian Partnership Act,1932

Gago's document

Page 2: 01 - Partnership Act

Essential Elements of Partnership

a) Two or more persons

b) Agreement

c) Sharing of Profits

d) Business e) Mutual Agency

Essential Elements of Partnership

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Page 3: 01 - Partnership Act

TEST OF PARTNERSHIP [SECTION 6]

Cases where the Partnership Relation does not exist

a) Joint owners of some property sharing profits or gross returns arising from the property

[Leading case:; Govind Nair v. Maga]

b) Persons sharing the profits but not having mutual agency Mollow March & Co. v. The Court of

Wards

A widow or child of deceased partner who receives a share

of profits

A servant or an agent who receives a share of profits as part of his remuneration; and

[Munshi Abdul Latif v. Gopeshwar Chattoraj]

 

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Page 4: 01 - Partnership Act

Distinction between Partnership And Co-Ownership

1. Agreement2. Business3. Profit and loss4. Mutual agency5. Name of the persons

involved

6. Maximum Limit

7. Transfer of Interest

8. Right to claim partition

9. Lien on property

Basis of distinction

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Page 5: 01 - Partnership Act

Partnership and Hindu Undivided Family (HUF)

1. Agreement

2. Regulating Law

3. Name of the persons involved

4. Maximum Limit

5. Admission of new members

6. Minor members

7. Female members

8. Implied Authority

9. Liability of members

10. Right to demand accounts

11. Effect of death of a member

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Page 6: 01 - Partnership Act

PARTNERSHIP AND COMPANY

Basis of distinction

1. Legal Entity

2. Liability

3. Tenure

4. Number of members

5. Transfer of interest

6. Agency

7. Distribution of profits

8. Management

9. Property

10. Audit

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PARTNERSHIP AND CLUB

Basis of distinction

1. Objects

2. Number of members

3. Tenure

4. Agency

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Page 8: 01 - Partnership Act

REGISTRATION

Is the Registration of Firm Compulsory?

a) No suit by a partner against the firm or the other partner [Section 69(1)]

b) No suit by the firm against third parties

[Section 69(2)]

c) No right to claim set off in excess of Rs. 100

[Section 69(3)]

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Page 9: 01 - Partnership Act

Rights not Affected by Non-registration

a) Rights of unregistered firm or partners thereof

Right of a firm or partner of a firm having no place of business in India

i. Right to file a suit or claim of set-off if the value of suit does not exceed Rs.100 [Section 69(4)(b)]

ii. Right of a partner to sue

a) For the dissolution of the firm

b) For the accounts of a dissolved firm

c) For claiming share of the assets of a dissolved firm [Section 69(3)(a)]

b) Right of a third party to file a suit against the unregistered firm or partners thereof

c) Power of an Official Assignee or Receiver or Court to realise the property of an insolvent partner [Section 69(3)(b)]

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Page 10: 01 - Partnership Act

Types Of Partners

Actual or Ostensible partner

Sleeping or Dormant partner

Partner by Estoppel

Partners in profits only

Sub-Partner

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Page 11: 01 - Partnership Act

Partners by Estoppel or Holding out [Section 28(1)

He must have represented himself to be a partner by word spoken or written or by his conduct

The other person acting on the faith of such representation must have given credit to the firm.It is immaterial whether the person so representing to be a partner,is aware or not that the representation has reached the other person

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Page 12: 01 - Partnership Act

Position of Minor as a partner

Rights

He has the right to share the profits and property of the firm in accordance with the agreement.

He has the right to have access to, and inspect and copy,any of the accounts of the firm.

He has the right to file a suit for his share of profits or the property of the firm when he is not given his due share of profits.However,he can exercise this right only when he decides to severe his connections with the firm

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Page 13: 01 - Partnership Act

Liabilities

He is liable only to the extent of his share in his profits and the property of the firm.He is not personally liable to the third parties

He cannot be declared insolvent upon declaration of firm’s insolvency .

His share vests in the official receiver or Official Assignee.

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Absolute duties Of Partner

To attend diligently

To equally contribute to the losses.

To indemnify the firm

To hold and use firm’s property for business purposes

To account for and pay the personal profits from transactions of firm etc.

To account for and pay the personnel profits from a competing business

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Rights Of Partner

Right to take part

Right to express opinion

Right to have access to book

Right to share profits equally

Right to claim interest on advances

Right to be indemnified

Right to prevent the introduction of a new partner

Right to retireGago's document

Page 16: 01 - Partnership Act

Right not to be expelled

Right to carry on competing business

Right to share Subsequent profits

Right to dissolve the partnership

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Liabilities of partner to third parties

Liability of a partner for acts of the firm

Liability of the firms for wrongful acts of partners

Liability of the

firm for misappropriation

by partners

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Page 18: 01 - Partnership Act

Authority

Implied Express

Act should be done for carrying the business

In the firm name

In the usual way

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Page 19: 01 - Partnership Act

Implied authority is available for the following acts

A. Buying and selling of gods,on behalf of the firm, in which the firm deals;

B. Receiving payments of the debts due to the firm and giving valid receipts for them

C. Contracting debts and paying debts on behalf of the firm

D. Setting accounts with person dealing with the firm.

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Page 20: 01 - Partnership Act

E. Employing the servants for the partnership firm.

F. Drawing cheques,accepting or endorsing bills of exchange and promissory notes in the name of the firm

G. Pledging movable property of the firm

H. Suing on behalf of the firm and defending suits in the name of the firm

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Page 21: 01 - Partnership Act

Implied authority is not available for the following

A. Submit a dispute relating to the business of the firm to arbitrations

B. Open a banking account on behalf of the firm in his own name

C. Compromise or relinquish any claim or portion of a claim by the firm.

D. Withdraw a suit or proceedings filed on behalf of the firm

E. Acquire immovable property belonging to the firm

F. Transfer immovable property belonging to the firm or

G. Enter into partnership on behalf of the firmGago's document

Page 22: 01 - Partnership Act

Reconstitution of a firm

(or) Dissolution of partnership

Insolvency of a partner

Liability of a incoming partner for firm’s acts done before his admission

Retirement of a partner

Expulsion of a partner

Introduction of a partner

Death of a partner

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Dissolution of firm

By Agreement By Notice By Court By Contingency By Compulsion

Insanity

Permanent incapacity

Misconduct

Persistent breach of agreement

Transfer of interest

Continuous lossesJust and equitable

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Page 24: 01 - Partnership Act

Public Notice [Section 72]

When a public notice is required to be given

On the retirement or expulsion of a partner

On the dissolution of the firm

On the election to become or not to become a partner by a minor on his attaining majority

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When a public notice is not to be given

A public notice is not to be given in the following two cases

On the death of a partner

On the insolvency of a partner

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