Indian partnership act 1932
• This act was earlier covered indian-contract
• This act, extends all over india excepts jammu
• This act was became effective 1 october, 1932
According to section 4 of the Partnership Act of 1932, which
applies in both India and Pakistan, "Partnership is defined as the
relation between two or more persons who have agreed to share
the profits and losses according to their ratio of business run by
all or any one of them acting for all". This definition superseded
the previous definition given in section 239 of Indian Contract
Act 1872 as – “Partnership is the relation which subsists between
persons who have agreed to combine their property, labour, skill
in some business, and to share the profits thereof between
them”. The 1932 definition added the concept of mutual agency.
A partnership firm is not a legal entity apart from the partners
constituting it. It has limited identity for the purpose of tax law
as per section 4 of the Partnership Act of 1932
Essential elements of partneship
1.Agreeement –an agreement from which
relationship of partnership arises may be
express,oral or in writing.
2.Sharing profit of business – generally sharing
of profit in equal ratio.
3.Business carried on by all or any of them
acting for all.
Features of partnership
• Two or more persons
In banking business partnership - 10
In other partnership
•Partner – Member of firm
, individually called partner
•Firm - Members of firm
i.e. partners are collectively
On the basis of duration
• Particular partnership – in this duration is
fixed and no.of activities are fixed
• Partnership at will – in this neither duration
is fixed nor activities are fixed.
Types of partner
Holding out partner
Partner by estoppel
Duties of partner
Duty to indemnify the firm.
Duty not to claim remuneration.
Duty to share loss.
Duty to partner not to earn / make secret
• Duty not to carry on similar business.
• Duty to carry business of firm diligently.
Rights of partners
• Right to take part in conduct of
• Access to books of firm.
• Right to share profit.
• Interest on capital.
• Interest on advance given by
• Right to retired.
• Right not to be expelled.
• Right to stop admission o new
• Right to be indemnified.
• Right to dissolve the firm.