Presenter

Pankaj Rao

B.Com ( Honours )

II Semester

Content

Definition of Partnership

Essentials element of partnership.

Kinds of partners

Types of partnership

Rights of partner

Partnership Deed

Difference Between Partnership firm and Company

Definition of partnership

( Acc. to Partnership Act 1932 )

“ Partnership is the relation between persons

who have agreed to share the profits

of a business

carried on by all or any one of them acting for all. ”

“ A business organization in which two or more individuals manage and operate the business.

Both owners are equally and personally liable for the debts from the business. “

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Other Definition

Essential elements of partnership:

Association of two or more persons

Partners must be competent

There must be existing business

Contract may be Expressed or implied

Sharing of profits

Prevalence of mutual agency.

Kinds Of Partners

There may be different kinds of partners in a partnership firm. The important classification of partners is given below.

Actual or active partners,

Dormant or sleeping partner,

Nominal partner,

Partner in profits only .

Types Of Partnership

Partnership at will-Where time is not mentioned in agreement

Particular partnership –Partner in a specific venture only

Partnership for fixed term

Rights Of Partners

Rights to take part in management

Every partner has a right to take part in the conduct of the business.

Rights to inspect books

Every partner has a right to check the books of account of the firm and to get the

copies.

Rights to be consulted

Every partner has a right to be consulted and heard before any matter is decided.

Rights to share profit

Every partner has a right to share equally in the profits earned by the firm,

irrespective of his amount of capital contribution.

Rights to interest on capital

A partner is not entitled to receive interest on capital contributed by him..

Right to use property

Every partner of the firm is co-owner in the property of firm and he has a right to use it for the best benefit of the business of the allowed.

Rights to admit and expel partner

A new partner cannot be admitted in the firm and an old partner cannot be expelled from the firm without the prior consent of all the partners.

Right to give opinion

Nature of the partnership business cannot be altered without the prior approval of all the partners.

Rights Of Partners

Right to collect debts

A partner has an implied right to collect partnership debts and to give receipts for payments.

Right to act as agent

Every partner can act as an agent on behalf of the remaining partners and bind the other partners to his act.

Rights of retirement

Every partner has a right of retirement from the firm with the mutual consent of all other partners. But when the partnership is at will, he can leave the firm at

any time while giving a due notice of his retirement from the firm.

Right of competing business

Any outgoing partner has a right to start a business competing with that of the firm but he cannot use the name of the firm.

Rights Of Partners

Right to Interest on Loan

Right not to expelled

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Rights Of Partners

There are few cases where an individual has the right to get profit of the business but he/she is not the partner in a firm

Property Owner

Money Lender

Employ

Widow

Sale of goodwill

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Exceptions

Partnership Deed

Partnership Deed is the document that defines the rights and obligations of partners.

Besides names, address and occupation of partners it lays down the duration of partnership, nature of

business, profit sharing ratio, right to interest, salary, commission etc.

Partnership Deed

A partnership deed should contain the following clause Name of the parties Nature of business Duration of partnership Name of the firm Capital Share of partners in profits and losses Banking, Account firm Books of account Powers of partners Retirement and expulsion of partners Death of partner Dissolution of firm Settlement of disputes

Effects of non Registration

No suit in a civil court by a partner against the firm or co partner

No suit in civil court against third parties

Firm or partners cannot make claim to set off other proceeding based upon a contract

Difference between partnership and Company

Regulating act Number of members Entity Liability Authority of members Audit Registration Ownership of the property