Partnership act


Published on

Published in: Education
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Partnership act

  1. 1. Business Entities<br />
  2. 2. Trimex International V/s Vedanta Aluminium<br />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<br />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<br />
  3. 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 .<br />
  4. 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 ??<br />
  5. 5. Types of Business Entities PartnershipSole ProprietorshipPublic Company Private Company Charitable organisation<br />
  6. 6. Defination of Partnership and partners<br />Sec 4 of the act defines:<br /> “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”<br />“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 “<br />
  7. 7. Essential Elements of partnership<br />Agreement<br />Agreement between two or more person<br />Must carry on some business<br />Share profits of the business<br />Mutual agency <br />
  8. 8. Criteria of partnership firm <br />Section 11 of the Company’s act :maximum limit<br />Banking Business : 10 persons <br />Other purpose :20 persons <br />Otherwise :<br />Partnership firm becomes an illegal association <br />
  9. 9. Who are not Partners ??<br />Joint owners of some property sharing profit arising from the property <br />Members of a Hindu undivided Family<br />What is an Hindu undivided family <br />“consists of all persons lineally descended from a common ancestor and include their wives and unmarried daughters”<br />
  10. 10. Basis of disntinction between an partnership firm and HUF<br />Agreement<br />Regulating Law <br />Names of the persons involved<br />Maximum limit <br />Admission of new members<br />Minor members<br />Female members<br />Implied authority<br />Liability of members<br />Right to demand accounts <br />Effect of a death of a member<br />
  11. 11. Mode of creating partnership<br />May be formed by written or oral agreement<br />All essentials of valid contract to be present<br />Mutual rights and obligation to be in the partnership deed<br />Partnership deed to be registered<br />
  12. 12. Rights of the partners – Sec 12,13,31,32,33,36,37 and 40<br />Right to take part<br />Right to express opinion<br />Right to have access to books <br />Right to receive interest on capital out of profits<br />Right to share profits equally<br />Right to claim interest on advances<br />Right to be indemnified<br />Right to prevent the introduction of a new partner <br />Right to retire<br />Right not to be expelled<br />Right to carry on competing business<br />Right to dissolve the partnership <br />
  13. 13. Duties of the partners ..sec 9 and 10<br />To carry the business of the firm<br />Just and faithful<br />Render true accounts and full information<br />Indemnification<br />To hold and use firm’s property for business purpose<br />Attend diligently<br />Not to claim remuneration for taking part<br />To contribuite equally to losses<br />To indemnify the firm<br />To account for and pay the personal profits <br />To account for and pay the personal profits from competing business<br />
  14. 14. What does the partnership deed contain ??<br />Nam of the firm<br />Name and address of all partners <br />Name and place of business<br />Date of commencement of partnership deed<br />Duration of Partnership<br />Amount of Capital of each partner <br />Profit sharing ratio<br />Interest on capitals<br />Interest on loan advanced by the partner to the firm<br />Salary or commision payable to any partner<br />Methods of valuation of goodwill and other assests ,liabilities in case of retirement or death of a partner <br />Settlements of accounts in case of retirement /death of a partner or dissolution of firm <br />
  15. 15.
  16. 16. Registration and its procedure<br />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”<br />Procedure:<br />Obtain the statement in the prescribed form<br />Statement to be signed and verified by all the partners <br />File the statement with the prescribed fee in the registrar office<br />Registrar satisfied with all provision shall file the statement in the register name as Register of Firms<br />Register than issues the certificate of registrations<br />
  17. 17. Should Partnership firm be registered ???<br />The effect of non registration of the firm (sec 69)<br />No suit by a partner against the firm or the other person<br />No suit by the firm against the third parties <br />No right to claim set off in excess of Rs 100<br />
  18. 18. Types of partnership <br />Partnership at Will –Sec 7<br /> No provision in contract for duration of partnership<br /> If any partners gives notice of dissolution in writing ,the partnership is dissolved<br />Particular Partnership – Sec 8<br /> A person may become partner with another person in particular adventure and/or undertaking<br /> On completion of such a venture ,the partnership comes to an end<br />Partnership for a fixed term <br /> Duration is fixed<br /> Partnership comes to an end when the term expires <br />
  19. 19. Types of partners <br />Actual or ostensible<br />Sleeping or dormant partner <br />Nominal Partner<br />Partners in profit only <br />Sub partners <br />Partners by Estoppel or Holding out <br />
  20. 20. Whether Minor can be a Partner ??<br />Section 30 of the Act <br />“With the consent of all the partners for the time being ,a minor may be admitted for the benefits of the partnership “<br />There must be an existence of partnership <br />Mutual consent of all partners<br />Admitted to extent of procuring benefits of the partnership <br />
  21. 21. JayeshPandya V/s rakeshsharma<br />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<br />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<br />Mr.rakesh acquired some rights and dispute arose between Jayeshpandya and (sukanya) i.eMr.rakesh.<br />
  22. 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 ??<br />
  23. 23. Basis of Distinction between the Partnership Firm and Company <br />Legal entity <br />Liability <br />Tenure<br />Number of members <br />Transfer of interest <br />Agency <br />Distribuition of profits <br />Management <br />Property <br />
  24. 24. Dissolution of the firm<br />Dissolution may be either of partnership or of a firm <br />“Dissolution of partnership refers to the change in the existing relations of the partners”<br />“Dissolution of firm means the dissolution of partnership between all the partners of the firm”<br />
  25. 25. Modes of the dissolution of the firm (sec 40 to 43)<br />Dissolution without the order of the court<br />By mutual consent <br />Compulsory dissolution <br />On the happening of certain contigencies<br />By notice <br />Dissolution by an order of court <br />Insanity <br />Permanent incapacity <br />Misconduct <br />Persistent breach of agreement <br />Transfer of interest <br />Perpetual losses <br />Any other just and equiatble ground <br />
  26. 26. What is LLP act 2008<br />LLP act received the assent of the PRESIDENT ON 7/1/2009<br />Why there is a need for LLP partnership act ???<br />
  27. 27. Features of Limited Liability <br />Limited Liability <br />To make profit <br />Perpetual succession <br />Separate legal entity <br />Change in the partners <br />Provisions of Indian Partnership act not applicable <br />Two designated partners <br />Maintain proper book of accounts <br />