HAFIZ M BILAL

M.CoM 2nd

PunjAB CoLLege

dAskA

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

Partnership Act 1932

Content

Essentials element of partnership

Kinds of partners

Types of partnership

Rights of partner

Duties of partner

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.

Essential elements of partnership:

Association of two or more persons;

Existence of a contract;

Carrying on a business;

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:Active partners,Sleeping partner,Nominal partner,Partner in profits only,Senior partner,Junior partner,Secret partner,Minor partner.

An invested person who is involved in the daily operations of the partnership. An active partner

helps run the business to enhance his or her returns and is therefore considered a material participant. This person typically shares more risk and return

versus a limited or silent partner.

'ACTIVE PARTNER'

Sleeping Partner

one whose name does not appear in the firm, and who takes no active part in the business, but who

has an interest in the concern, and shares the profits, and thereby becomes a partner, either

absolutely, or as respects third persons.

sleeping partner

Nominal Par tner

Person who has an interest in the success of a partnership firm but, legally, is not partner because

he or she neither owns a part of the firm nor actively participates in its affairs.

Nominal Par tner

Minor Partner

age below 18

Just profit

No loss

Decide with 6 month

Minor Par tners

Senior Partner

InvestorExpreience

Partner whose level of involvement (and the associated authority, responsibility, risks,

and rewards) is greater than that of the junior partners, and at par with other senior partners.

senior partner

Junior Partner

A partner in a partnership who is less important than a senior partner, but may become a

senior partner later. 

junior partner

Rights Of PartnersSection 12 & 13 of the partnership act

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.

Duties Of Partners:

To work for common advantageTo be faithfulRender true account To indemnify for fraudNot to claim remunerationTo share profits and lossesTo act within authorities given

1. Limited 2. Unlimited

Liabilities Of Partners

A type of business where owners share joint and several responsibility for the entire amount of debt

and other liabilities amassed by the business. Unlimited liability is not capped at a maximum amount and exists regardless of the amount of

investment each owner has personally made. If the business is unable to meet any financial obligations

or settle any outstanding liabilities, the owner's personal assets can be seized to satisfy the debts.

UNLIMITED LIABILITY'

Limited liability partnerships (LLP) retain the tax advantages of the general partnership form, but offer some personal liability protection to the participants.  Individual partners in a limited

liability partnership are not personally responsible for the wrongful acts of other partners, or for the

debts or obligations of the business.

Limited Liability Partnerships (LLP)

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