19499951 the indian partnership act 1932ppt

8/3/2019 19499951 the Indian Partnership Act 1932ppt

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The Indian Partnership Act,

1932


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Definition

Section 4 of the Indian Partnership Act, 1932defines Partnership as the relation betweenpersons who have agreed to share the profits

of a business carried on by all or anyone ofthem acting for all.

The persons who enter into such relationship

are called PARTNERS


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Essential Elements of Partnership

Association of two or more persons Max. limit : 10 for banking; 20 for other business

Result of an agreement Partnership relation based on Contract.

Implied or Express (Oral or Written)

Must carry on some business Trade, Occupation or Profession

Share profits of the business Business is carried on by all or any one of them

acting for all (mutual agency)


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Mode of Creating Partnership

Based on agreement Agreement may be express or implied

In Writing : helpful in times of adversity

Written agreement : Partnership Deed

Essence of Partnership : Trust & Confidence

Drafted with care and signed by all partners

Stamped in accordance with Indian Stamp

Act Firm should be registered and copy of the

Deed to be filed with the Registrar


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Partnership Deed

Prepared for resolving mutual differences

Usual Contents :

Date of Agreement

Name and Address of the Firm

Name and Address of the Partners

Nature of Business

Duration of Partnership Capital invested by each partner

Ratio to divide profits and loss


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Partnership Deed

Usual Contents Contd. : Appointment of Auditor and remuneration

Drawing by partners and interest

Interest on Capital and Advances

Salary and Commission payable to partners

Duties, Functions and Powers of Partners

Rules regarding admission, retirement and death

Dissolution Arbitration

Method of valuation of Goodwill


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Firm Name

Name under which the business is carried on

Any name

Should not be a name already adopted by areputed firm, to mislead public

Should not contain words : Crown, Emperor,King, Queen, Royal, Empire, Imperial or

words expressing or implying the sanction,approval or patronage of Government


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Property of the Firm

Joint property of all the partners as opposedto their personal property

Property includes

Originally brought into firm by partners

Acquired by the firm

Acquired by one or more partners for the purposeof business

Goodwill of the firm To be held and used by all partners for the

purpose of business (not for private use)


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Positions

Lunatic : cannot become a partner

Alien Enemy : cannot become a partner

Alien Friend : can enter into contract

Woman : Married or Unmarried can be apartner

Insolvent : Cannot become a partner; ceasesto be a partner from date on which order waspassed by court


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Position of Minor

Sec 30(1), A person who is a minor accordingto law to which he is subject may not be apartner in a firm, but with the consent of all

the partners for the time being, he may beadmitted to the benefits of partnership.

A minor can only be admitted to the benefits

of an already existing partnership


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Position of Minor

During his Minority Rights

Right to receive agreed share of profits andproperty

Have access to and inspect and copy theaccounts of the firm

If share in profits is not given, can sue (can do ifhe wants to sever his connection)

Liabilities Only to the extent of share in profits and

properties (not personally liable)


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Position of Minor

On Attaining Majority

Within six months should give notice whether heis joining the partnership or not.

If notice not given he shall become a partner


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Position of Minor

When a Minor elects to become a partner

Rights Share remains the same

Rights and Liabilities as that of a full fledged partner

Rights will be the same till the date on which hebecomes a partner

Liabilities Liabilities will be the same till the date on which he

becomes a partner Personally liable to third parties for all acts of the firm

from the date of becoming a partner


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Position of Minor

When a Minor elects not to become a partner

Rights

Rights will be the same till the date of notice

Entitled to sue for his share of property and profits

Liabilities

Liabilities will be the same till the date of notice

His share of property and profits will not be liablefor any acts of the firm after the date of notice


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Types of Partnerships

Partnership at Will

No provision in contract between the partners for

Duration of Partnership

Determination of Partnership

If any partner gives notice of dissolution in writing,the partnership is dissolved.


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Particular Partnership

A person may become a partner with anotherperson in particular adventures or undertakings.

On completion of such a venture, the partnershipcomes to an end.


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Partnership for a Fixed Term

Duration is fixed

Partnership comes to an end when the term

expires. If Partners continue the business after the fixed

period, it becomes partnership at will.


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Classes of Partners

Actual or Active Partner Engaged in actual conduct of the business

His acts binds the firm and other partners

Notice to be given in case of retirement

Sleeping or Dormant Partner Does not take part in the conduct of business

Contributes his share of capital and enjoys profits andlosses

Not known to outside world

Not liable to third parties for the acts of the firm.

Not required to give notice in case of retirement


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Classes of Partners

Nominal Partners

No real interest in business, Does not contributeany capital, Lends his name only

No share in profits but liable to third parties for allacts of the firm

Partner in Profits only

Shares the profits but not losses No interest in the management of the firm

Liability for the acts of the firm is unlimited


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Classes of Partners

Partner by Estoppel or Holding Out

Represents himself as a Partner, by wordsspoken or written or by conduct

Liable as a partner if credit is given to the firmbased on his representation. He cannot deny.

If a partner does not give public notice and hisname is still used in the business, he is also liable

to third parties

Deceased partner is an exception to this rule.


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Limited Liability Partnership

Limited Liability Partnership Act, 2008 cameinto effect from 31st March 2009.

LLP: A corporate business vehicle thatenables professional expertise and

entrepreneurial initiative to combine andoperate in flexible, innovative and efficientmanner, providing benefits of limited liabilitywhile allowing its members the flexibility for

organizing their internal structure as apartnership.

http://llp.gov.in/
http://llp.gov.in/http://llp.gov.in/


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Limited Liability Partnership

LLP has separate Legal Entity Liability of the partners limited to their agreed

contribution

Not liable for the independent or un-authorized actions

of other partners Perpetual succession

Indian Partnership Act, 1932 not applicable

No maximum limit of members; one partner should beIndian

Registrar of Companies - register and control LLPs.


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19499951 the indian partnership act 1932ppt

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