Unit 2 indian partnership act 1932


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Unit 2 indian partnership act 1932

  2. 2. DEFINITION OFPARTNERSHIP Partnership is the relation between persons who have agreed to share the profits of the business carried on by all or anyone of them acting for all. Persons who have entered into partnership with one another are individually called partnership and collectively are called firms The name under which the business is carried on is called the firm name.
  3. 3. Characterstics Association with 2 or more persons Agreement Business Sharing of Profits Mutual Agency
  4. 4. Law of partnership-extension oflaw of agencyThe partnership business may be carried on by all or anyone of them acting for all. Thus the relationship of principal and agent is established amongst partners and this relationship is governed by the law of agency.
  5. 5. A partner assumes 2 foldcharacter:1. He is an agent of the firm so far his dealings with the outside world for the purpose of the business of the firm are concerned.2. He acts as a principal amongst other partners.
  6. 6. Formation of Partnership Partnership based on agreement Partnership agreement can be made orally or in written Essential elements of valid contract has to be present Object of the partnership should be legal Minor may be admitted to the benefits of partnership with the consent of all the partners No consideration required for forming agency; likewise for partnership also
  7. 7. Partnership deed The document containing the agreement between the partners are called Partnership Deed.Contents of Partnership Deed:1. Nature of the business2. Place of the business3. Name and address of the partners4. Profit sharing ratio5. Interest on capital etc….
  8. 8. Who may not be partnersOnly competent persons can enter into partnership agreement1. Alien enemy2. Minor3. Person of Unsound Mind4. Corporation
  9. 9. Test for partnership Agreement between the parties Real relationship between the parties Sharing of profits Mutual agency
  10. 10. Cases where no partnershiprelation exists Joint Owners Sharing of Profits Membes of Joint Hindu Family
  11. 11. Partnership and otherassociationsPartnership and Joint Hindu Family 1. Mode of Creation 2. Interest in Business 3. Admission of New Members(female, Minor, Fluctuating) 4. Authority of Members 5. Liability of Members 6. Right of Members to demand accounts 7. Registration
  12. 12. Partnership and co-ownership Mode of Creation Business Nature of Interest Transfer of Interest Number of Members Authority of Members Partition of Property Lien for Expenses
  13. 13. Duration for partnership Partnership for a fixed term Partnership at will Particular Partnership
  14. 14. Registration of FirmProcedure for registration:To be registered with Registrar of FirmsContents for application of registration Time of Registration
  15. 15. EFFECTS OF NONREGISTRATION Suits between partner and firm Suits between firm and third parties Claim of set off Alterations Penalty for false particulars Inspection for Registrar of Firms and documents and grant of copies Rules of Evidence
  16. 16. Relation of partners to oneanotherRights of a partner Right to take part in business Right to be consulted Right to access accounts Right to Share Profits Right to interest on capital Right to interest on advances Right to prevent entry of new partner No liability before joining Right to be as agent Right to retire Right to outgoing partner to share in the subsequent profits if his share is not settled by other partners.
  17. 17. Duties of a partner To carry on business to the greatest common knowledge To observe faith To indemnify for fraud/ willful neglect To attend diligently Not to claim remuneration To share losses To hold and use the property of the firm exclusively for the firm To account for personal profits To account for profits in competing business To act within authority Not to assign his rights To be liable jointly and severally
  18. 18. Property of the firm All property originally brought into the common stock Interest received out of the investments All properties acquired during the course of the business Goodwill(reputation, industrial contacts, brand image etc… which the firm has developed over the years)
  19. 19. Agreements in restraint oftradeExceptions:1.A partner shall not carry on another business while he is a partner2.An outgoing partner may agree with his partners not to carry on a similar business within a specific period3.upon dissolution, some or all of them will not carry on similar business 4. after dissolution and sale of goodwill, partners not to trade with the same brand name
  20. 20. Relation of partners to thirdpartiesImplied authority of a partners: Purchasing goods on behalf of the firm Selling the goods for the firm Receiving payments Settling accounts Borrowing money/ credit facilities on behalf of the firm Pledging on behalf of the firm Engaging servants/employees for carrying the activities of the firm
  21. 21. Partners authority incase ofemergencyPartner has authority incase of emergency if They are done to protect the interest of the firm and to prevent loss Partner should act to situations assuming if it was for his own case
  22. 22. Reconstitution of firm Introduction of a partner Retirement of a partner Expulsion of a partner Insolvency of a partner Transfer of a partner’s share Death of a partner
  23. 23. Types of partners Actual/ ostensible Partner Sleeping/dormant partner Nominal Partner Partner in profits only Sub-Partner Partner by Estoppel/ Holding out Minor as a Partner
  24. 24. Dissolution of a firmIt means complete break down or extinction of the relationship between all the partners of a firm
  25. 25. Dissolution of the firmWithout the order of With the order of the the court court1. By Agreement2. By Compulsory Dissolution3. On the happening of certain contingencies4. By Notice
  26. 26. By Agreement With the consent of all the parties In accordance with the contact between themCompulsory dissolution1. When one or all partners become insolvent2. By the happening of any event which makes it unlawful for the business firm
  27. 27. Dissolution on the happening ofcertain contingencies Expiry of the term Completion of a particular adventure Death of a partner Insolvency of partner/partners
  28. 28. Dissolution by noticeFirm may be dissolved by any partner who gives notice that the partnership will no longer exists.In such case, dissolution is counted from the day when the notice is issued by the partners
  29. 29. Dissolution by court Insolvent Incapacity Misconduct Persistent Breach Business working at loss Gambling of a partner in stock exchange Fraudulent Breach Persistent refusal or neglect by a partner to attend the business
  30. 30. Rights of partners ondissolution Have the right to wound up Right to have the debts of the firm settled out of the property of the firm Share the profits of the firm earned after dissolution Have the premium returned or premature dissolution Restrain the use of firm name or property by any partner for his own benefit
  31. 31. Liabilities of a partner ondissolution If public notice is not given, partners continue to be liable for any act done by any partner after dissolution To wind up the affairs of the firm in smooth manner To complete the transactions begun but unfinished at the time of dissolution
  32. 32. Settlement of accounts Sale of Goodwill Sharing of deficiency( first out of profits, then out of capital and last out of partners individual proportions in which they are eligible to share profits) Application of assets- first to pay the debts outside and then to share amongst the partners in their profit sharing ratio
  33. 33. Public NoticeTo be given when Retirement Dissolution of a registered firm Addition of new partnerBy how:1. By notice to the Registrar of Firms2. By publications in the Official Gazette3. By publication in Newspapers
  34. 34. Consequences if public noticenot given On retirement On dissolution On expulsion