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Partnership act

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  • 1. Business Entities
  • 2. Trimex International V/s Vedanta Aluminium
    Trimex is in the business of trading in the minerals across the world. Based on the orders of the purchasers ,they procure mineral ores from the suppliers,negotiate and finalise shipments with the shipowners and arrange for the shipment across the world.Vedanta in India is a major user of aluminium ore for their operations
    On 15/10/2007 ,Trimex submitted a offer through email for the supply of Bauxite to Vedanta.After several exchange of emails and aggreing to the terms of contract,Vedanta accepted the offer vide email 16/10/2007 confirming the supply 5 shipments of Bauxite from Australia to Vizag…vedanta’s request to reduce the rates..termination clause after 5 shipments ..Trimax on the same day conveyed that the rates cannot be reduced and would remain the same.Onther basis of acceptance of the offer,trimax concluded the deal with the bauxite supplier in austarlia and entered into an agreement with the ship owner on 17/10/2007
  • 3. On 26/10/2007, a meeting was held between the Trimax and Vedanata and the minutes of the meeting was signed . The acceptance of the offer was acknowledged by Vedanta in these minutes .Trimex provided a draft contrat and Vedanta made some changes in the contract and sent back to TrimaxApart from the offer dated 15/10/2007 ,trimax had earlier sent another offer on 5/9/2007 also for 45000 tonnes of Bauxite of which the offer has been followed with the purchase order and executed between the parties.The shipment of the previous offer was received by Vedanta on 12/11/2007.On 9/11/2007 Trimex entered into a Bauxite sales agreement with Rio tinto of Austarlia for the supply 225000 tonnes of Bauxite for the offer dated 15/10/2007.On 12/11/2007 Vedanta requested trimex to hold the consignment until further notice.On 13/11/2007 ,Trimex informed vedanta that it was not possible to postpone the consignment and requested them to sign the purchase agreement ..On 13/11/2007itself the ship owner nominated the ship for loading the material on 28/11/2007 .Trimex terminated the contract on 16/11/2007 reserving the rights to claim for damages .
  • 4. On 18/11/2007,Trimex formally informed the ship owners about the cancellation of carriage.On 19/11/2007 ,the ship owner made a claim of 1 million US $ towards commercial settlement and on 30/11/2007 ,trimax informed vedanta to pay a sum of 1 million US $ towards compensation for loss of profits and other cost and expenses for cancellation of the order. Vedanta rejected the claim of Trimex .Trimex thus filed the present petition.Vedanta submits that there is no concluded contract between the parties and the parties are still not ad idem in respect of various essential feature of the transaction.The draft contract received from Trimex was yet to be accepted by vedanta.Is there a valid contract between the parties ??Is Trimex liable to be compensated ??
  • 5. Types of Business Entities PartnershipSole ProprietorshipPublic Company Private Company Charitable organisation
  • 6. Defination of Partnership and partners
    Sec 4 of the act defines:
    “Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or anyone of them acting for all”
    “Persons who enter into partnership with one another are called ‘individually’ partners..’collectively’ as firm and the name under which they carry ‘business’ is called the firm’s name “
  • 7. Essential Elements of partnership
    Agreement
    Agreement between two or more person
    Must carry on some business
    Share profits of the business
    Mutual agency
  • 8. Criteria of partnership firm
    Section 11 of the Company’s act :maximum limit
    Banking Business : 10 persons
    Other purpose :20 persons
    Otherwise :
    Partnership firm becomes an illegal association
  • 9. Who are not Partners ??
    Joint owners of some property sharing profit arising from the property
    Members of a Hindu undivided Family
    What is an Hindu undivided family
    “consists of all persons lineally descended from a common ancestor and include their wives and unmarried daughters”
  • 10. Basis of disntinction between an partnership firm and HUF
    Agreement
    Regulating Law
    Names of the persons involved
    Maximum limit
    Admission of new members
    Minor members
    Female members
    Implied authority
    Liability of members
    Right to demand accounts
    Effect of a death of a member
  • 11. Mode of creating partnership
    May be formed by written or oral agreement
    All essentials of valid contract to be present
    Mutual rights and obligation to be in the partnership deed
    Partnership deed to be registered
  • 12. Rights of the partners – Sec 12,13,31,32,33,36,37 and 40
    Right to take part
    Right to express opinion
    Right to have access to books
    Right to receive interest on capital out of profits
    Right to share profits equally
    Right to claim interest on advances
    Right to be indemnified
    Right to prevent the introduction of a new partner
    Right to retire
    Right not to be expelled
    Right to carry on competing business
    Right to dissolve the partnership
  • 13. Duties of the partners ..sec 9 and 10
    To carry the business of the firm
    Just and faithful
    Render true accounts and full information
    Indemnification
    To hold and use firm’s property for business purpose
    Attend diligently
    Not to claim remuneration for taking part
    To contribuite equally to losses
    To indemnify the firm
    To account for and pay the personal profits
    To account for and pay the personal profits from competing business
  • 14. What does the partnership deed contain ??
    Nam of the firm
    Name and address of all partners
    Name and place of business
    Date of commencement of partnership deed
    Duration of Partnership
    Amount of Capital of each partner
    Profit sharing ratio
    Interest on capitals
    Interest on loan advanced by the partner to the firm
    Salary or commision payable to any partner
    Methods of valuation of goodwill and other assests ,liabilities in case of retirement or death of a partner
    Settlements of accounts in case of retirement /death of a partner or dissolution of firm
  • 15.
  • 16. Registration and its procedure
    Means “getting the partnership firm registered with the registrar of the firm of the area in which the place of the business of the firm is situated or proposed to be situated”
    Procedure:
    Obtain the statement in the prescribed form
    Statement to be signed and verified by all the partners
    File the statement with the prescribed fee in the registrar office
    Registrar satisfied with all provision shall file the statement in the register name as Register of Firms
    Register than issues the certificate of registrations
  • 17. Should Partnership firm be registered ???
    The effect of non registration of the firm (sec 69)
    No suit by a partner against the firm or the other person
    No suit by the firm against the third parties
    No right to claim set off in excess of Rs 100
  • 18. Types of partnership
    Partnership at Will –Sec 7
    No provision in contract for duration of partnership
    If any partners gives notice of dissolution in writing ,the partnership is dissolved
    Particular Partnership – Sec 8
    A person may become partner with another person in particular adventure and/or undertaking
    On completion of such a venture ,the partnership comes to an end
    Partnership for a fixed term
    Duration is fixed
    Partnership comes to an end when the term expires
  • 19. Types of partners
    Actual or ostensible
    Sleeping or dormant partner
    Nominal Partner
    Partners in profit only
    Sub partners
    Partners by Estoppel or Holding out
  • 20. Whether Minor can be a Partner ??
    Section 30 of the Act
    “With the consent of all the partners for the time being ,a minor may be admitted for the benefits of the partnership “
    There must be an existence of partnership
    Mutual consent of all partners
    Admitted to extent of procuring benefits of the partnership
  • 21. JayeshPandya V/s rakeshsharma
    Jayeshpandya was a real estate broker. He was doing busines in the name of pandya & associates .A partnership firm in the name of “Hetali Construct Co” came to be formed in 1992.One Ms.jakriti Mehta was a partner with 10% share ,the plaintiff and his brother were to have 50% of share and Mr.rakesh was to have 40%.Thus the partnership deed was signed which do not convey the tenure of partnership
    On 6/11/1995,the plaintiff applied for the registration of the firm .On 12/12/1995 objections were raised by the registrar and the plaintiff was asked to remove the objection The firm came to be registered on 31/5/2000
    Mr.rakesh acquired some rights and dispute arose between Jayeshpandya and (sukanya) i.eMr.rakesh.
  • 22. On 15th may 2000,Plaintiff files a suit for dissolution of the firm and accounts of the said firm and declaration that the deed be declared as null and voidThereafter before the 1st suit was withdrawn ,the plaintiff filed the second suit and prayed that the suit firm “HetaliContruction”standsdiossolved with effect from the date of filing the present suit alternatively ,the court should dissolve the firmBefore the 1st suit was withdrawn the plaintiff filed the second suit on 14/8/2001 for the dissolution of the firm Is the suit maintainable for dissolution of the firm ??Is the registration valid ??
  • 23. Basis of Distinction between the Partnership Firm and Company
    Legal entity
    Liability
    Tenure
    Number of members
    Transfer of interest
    Agency
    Distribuition of profits
    Management
    Property
  • 24. Dissolution of the firm
    Dissolution may be either of partnership or of a firm
    “Dissolution of partnership refers to the change in the existing relations of the partners”
    “Dissolution of firm means the dissolution of partnership between all the partners of the firm”
  • 25. Modes of the dissolution of the firm (sec 40 to 43)
    Dissolution without the order of the court
    By mutual consent
    Compulsory dissolution
    On the happening of certain contigencies
    By notice
    Dissolution by an order of court
    Insanity
    Permanent incapacity
    Misconduct
    Persistent breach of agreement
    Transfer of interest
    Perpetual losses
    Any other just and equiatble ground
  • 26. What is LLP act 2008
    LLP act received the assent of the PRESIDENT ON 7/1/2009
    Why there is a need for LLP partnership act ???
  • 27. Features of Limited Liability
    Limited Liability
    To make profit
    Perpetual succession
    Separate legal entity
    Change in the partners
    Provisions of Indian Partnership act not applicable
    Two designated partners
    Maintain proper book of accounts

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