8/13/2019 LAW Partnership Act 1932

1/10

Partnership

Section 4 of the Partnership Act, 1932 defines the termPartnershipas under:

Partnership is the relation between persons who have agreed to

share the profits of a business carried on by all or any of themacting for all.

Thus, Partnership is the name of legal relationshipbetween/among persons who have entered in to the contract

8/13/2019 LAW Partnership Act 1932

2/10

Partnership Act, 1932 Indian Partnership Act, 1932 is a Central Act. (made by Parliament

This Act deals with special type of contract

Provisions regarding contract of partnership were earlier containedin the Indian Contract Act, 1872.

This Act extends to the whole of India except the state of Jammu

and Kashmir.

This Act came in to force on 1.10.1932, except section 69 which

came into force on the 1stDay of October, 1933.

8/13/2019 LAW Partnership Act 1932

3/10

Types of Partners Active partner

Sleeping partner

Nominal partner (does not contribute any capital; but lends his nameand credit to the firm)

Sub-partner

Partner by Estoppels or Holding out:

Minor as a partner

8/13/2019 LAW Partnership Act 1932

4/10

8/13/2019 LAW Partnership Act 1932

5/10

Contents of partnership Deed Nature of business

Duration of partnership

Name of the firm

Capital

Share of partners inprofits and losses

Bank Account firm

Books of account Powers of partners

Retirement and expulsionof partners

Death of partner

Dissolution of firm

Settlement of disputes

8/13/2019 LAW Partnership Act 1932

6/10

Characteristics of Partnership

Agreement

Registration

Number of Partners

Profit and LossDistribution

Business

Unlimited Liability

Share in Capital

Management

Payment of Tax

Co-Operation

Transferability of Shares

Dissolution

8/13/2019 LAW Partnership Act 1932

7/10

Maximum Limit on Number of Partners Section 11 Companies Act provides that the

maximum no. of persons, a firm can have:In case of partnership firm carrying on a banking business 10In case of partnership firm carrying on any other business 20If the number of partners exceeds the aforesaid limit, the

partnership firm becomes an illegal association.If an association of persons or firm having members or partners exceeding theAbove limit will not be an illegal association if that firmsobjective is not to

earn profit.

8/13/2019 LAW Partnership Act 1932

8/10

Essentials Of A Partnership1. Agreement

2. Sharing Of Profits

3. Business

4. Relation Between Partners

5. Twoor More Person

8/13/2019 LAW Partnership Act 1932

9/10

Rights Of The Partners1. To take partin the management of the business.

2. To express opinionin matters connected with the business. Hehas a right to be consulted and heard in all matters affectingthe business of the firm

3. To have free access to all the records, books of account of thefirm and take copy from them.

4. To share in the profits of the business. Every partner isentitled to share in the profits in proportion agreed to betweenthe parties.

5. To get interest on the paymentof advance. Where a partnermakes for he purpose of the business.

6. To be indemnified by the firm against losses or expensesincurred by him for the benefit of the firm.

8/13/2019 LAW Partnership Act 1932

10/10

Registration Of A Partnership FirmProcedure For Registration

The registration of a firm may be effected at any time by sending by post or

delivering to the Registrar of Firms of the area in which any place of business ofthe firm is situated or proposed to be situated, a statement in the prescribed formand accompanied by the prescribed fee, stating :

1. the firm name.

2. the place or principal place of business of the firm.

3. the names of any other places where the firm carries onbusiness.

4. the date when each partner joined the firm.

5. the names in full and permanent addresses of the partners.

the duration of the firm.