Business Law

BUSINESS LAW
Scintilla
2/5/2012
Business Law, Scintilla
Book- 3 Chapter-1
Nature of Partnership
2/5/2012 Business Law, Scintilla
PARTNERS HIP
Partnership is the relation between persons who have agreed
to share the profits of the business.

Partnership Act, Section-4
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E L E M E N T S O F A PA RT N E R S H I P
Voluntary Agreement Sharing of Profits of Business Mutual Agency
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V OLUNTARY A GREEMENT
Agreement between two or more persons
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S H A R I N G P RO F I T S O F BU S I N E S S
Partners must
share profits
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E XC E P T I O N S O F S H A R I N G P RO F I T
Sharing of profits may exist under circumstances where there is no question of partnership
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Creditor taking a share of profits
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Employee getting share of profits
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Share of profits given to workers as bonus
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10
MUTUAL AGENCY
The most important feature Every partner have the authority to act on behalf of all.
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Who can be partners? ??????
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12
Partner!!
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WHO CAN BE PARTNER?

2. Minor 3. Person of unsound mind 4. Women 5. Company
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PA RT N E R S H I P A N D C O OW N E R S H I P
Partnership Co-ownership
1. always implies a business
1. may exist without any business
2. In a partnership each partner is 2. co-ownership is not the agent the agent of other partners of other owners 3. always arises out of agreement 4. Sharing of profit exits 3. co-ownership may arise by agreement 4. but not necessarily in coownership
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PA RT N E R S H I P A N D A J O I N T H I N D U FA M I LY F I R M
Differences between Hindu firm and contractual partnership: Criteria 1. Method of creation 3. Liability of members 4. Registration 5. Unity of ownership Joint Hindu Family Firm 1. by operation of law 3. only manager 4. not required 5. no one can claim as the owner Contractual partnership 1. by agreement 2. every partners 3. every partners 4. optional 5. partners can claim
2. Authority of members 2. only firm manager
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PA RT N E R S H I P A N D A J O I N T H I N D U FA M I LY F I R M
Criteria 6. Law 7. Partnership 8. Accounts 9. Numbers of members Joint Hindu Family Firm 6. governed by Hindu law 7.Undivided family cannot enter into partnership 8. cannot ask for accounts 9. no limit Contractual partnership 6. governed by the partnership act 7.Karta of family can join partnership 8. partners can ask 9. limited from 2 to 20
10. Death
10. has no effect
10. dissolves the firm
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CLASSES OF PARTNERS
1. Active partners: An active partner actually participates
in the business firm.
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CLASSES OF PARTNERS
2. Dormant, sleeping or normal partner: These partners are not active
in business.
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Classes of partners
3. Sub partner: The transferee share of a partner is
called Sub partner.
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20
NAME OF A PARTNERSHIP
The partners may select any firm-name they please, subject to the following restrictions:
They must not select a name which will fraudulently

imply that their business is the same other competing concern.
They cannot use words like president , Royal etc.
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CLASSES OF PARTNERSHIP 1. Partnership at will :When the partnership is not

for a fixed period of time is called a partnership at will
2. Particular partnership/joint venture 3. Limited partnership
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CLASSES OF PARTNERSHIP Partnership at will : When the partnership is not for a fixed period of time is called a partnership at will
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CLASSES OF PARTNERSHIP
Particular partnership/joint venture: A particular partnership is one which is formed for a particular adventure or undertaking.
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CLASSES OF PARTNERSHIP
Limited partnership: According to Partnership Act 1907, a partnership may be formed in which the liability of all partners is limited. But there must be one partner wit
unlimited liability.
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PARTNERSHIP PROPERTY
The property of firm means:I. Property originally brought in by the partners
II. Property obtained while the firm was in business III. The goodwill of the firm.
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T H E PA RT N E R S H I P AG R E E M E N T I. Name and addresses of the partners.
II. Firm name, nature of business. III. Place and address of business IV. Duration of partnership and its dissolution etc.
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REGISTRATION OF FIRMS
Not compulsory
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:
F O R M AT I O N O F R E G I S T R AT I O N
I. II. The firm name The place
III. The date

IV. The duration V. The names in full and permanent address of partners.
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TI ME FOR REGI STRATI ON

A firm may be register at any time.
Consequence of non registration:
I.
II. III.
Unregistered firm cannot file a suit

No suit can be filed on behalf of an unregistered against any third party. An unregistered cannot claim a set off in a suit.
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31
:
T Y P E S O F C O N T R AC T Expressed contract Implied contract
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G E N E R A L RU L E S R E G A R D I N G PA RT N E R S H I P
1.General duties of partners: Partners are bound to carry on a
business of the farm to greatest common advantage to be just and faithful to
the each other. Sec 9
2. Indemnity: Every partner shall indemnify the farm for any loss
caused to it by his fraud in the conduct of the business of the farm. Sec 10
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AC T R E G A R D I N G R E L AT I O N S H I P M U T UA L R I G H T S A N D D U T I E S
1. 2. 3. 4. Rules regarding the conduct of the business. (Sec 12) Mutual Rights and duties .(sec 13) Personal profit earns by the partners. (Secret profit sec16) Continuance of pre-existing Teems. (sec 17)
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RU L E S R E G A R D I N G T H E C O N D U C T O F T H E BU S I N E S S
A. B. Every partner has right to take part in the conduct. Every partner is bound to attend diligently to his duties
in the conduct of the business. C. Every partner has a right to have access to and to inspect
and copy any of the books of the farm.
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35
M U T UA L R I G H T S A N D D U T I E S
A. A partner is not entitled to receive remuneration for taking part in the conduct of business. B. The partner are entitle to share equally in the profits earned and
shall contribute equally to the losses.

C. Where a partner is entitle to interest on the capital subscribed by him such interest shall be payable only out of the profits. D. A partner shall indemnify the farm for any loss caused to it by his willful neglect in the conduct of the business of the farm.
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P E R S O N A L P RO F I T E A R N E D B Y THE FIRMS A.If partner earned any profit by using any image of the farm, he must pay it to the business.
B. If a partner run same business like there

business, he shall account for that and pay all profit to the business farm.
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C O N T I N UA N C E O F P R E EXISTING FIRMS If the relationship remains same but constitution of the farm any reason, the business not includes the original conduct that was undertaken.
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38
AGENCY
Partner to be an agent of the farm: Subject to the provisions of the Act, a partner is the agent of the farm for the purpose of the business of the farm[sec 18]
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THE AUTHORI TY OF THE PARTNER
1. Express authority 2. Implied authority
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T H E AU T H O R I T Y O F T H E PA RT N E R
Express authority:
Expressly given to a partner By the agreement of partnership
Implied authority:
The authority to bind the farm Which arises by implication of law from the facts of partnership
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L I M I TAT I O N S O F A PA RT N E R S I M P L I E D AU T H O R I T Y
The implied authority does not empower him to:
Submit a dispute relating to the business of the firm to arbitration Open a banking account on behalf of the firm in his own name Withdraw a suit filed on behalf of the firm
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LI MI TATI ONS OF A PARTNERS I MPLI ED AUTHORI TY

Admit any liability in a suit against the firm Acquire immovable property on behalf of the firm Transfer any immovable property belonging to the firm
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RIGHTS OF PARTNERS
Conduct of business Can express opinion Access, inspection, copy Equality of profits Interest on capital Interest on advance To get indemnity
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RIGHTS OF PARTNERS
Application of property of firm Partners authority Powers in an emergency Reconstitution Dissolution Right to carrying on a competing business Right to share profits after retirement
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45
DUTIES OF PARTNERS
Justice, Faithfulness, True accounts, Full information To pay indemnity
To attend diligently
No remuneration Equality of losses
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DUTIES OF PARTNERS
To pay indemnity for willful neglect No private benefit
To account for secret profit

No secret profit Unlimited liability
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PA RT N E R S H I P B Y H O L D I N G OUT OR ESTOPPELS
If a person ,by words spoken or written, or by conduct ,represents himself or knowingly permits himself to be represented, to be a partner in a firm, he is liable as a partner in that firm to any one who has on the faith of
any
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RECONSTITUTION OF A FIRM
Incoming & Outgoing Partners-
1. Introduction of a New Partner (Sec. 31) 2. Retirement of a Partner (Sec. 32)

a.
With the consent of all the other partners.
b. In accordance with the terms of the agreement of partnership.
c. By giving notice in writing to all the other partners.
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INCOMING AND OUTGOING PA RT N E R S

Expulsion of a Partner (Sec. 33) a. When the contract contains provision for expulsion under started
circumstances.
b. The power to expel is exercised by the majority of the partners. c. The expelled partner has been given the opportunity to answer the
charges which is against him.
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INCOMING AND OUTGOING PARTNERS

4. Insolvency of a Partner (Sec. 34) 5. Death of a Partner (Sec. 35) 6. Transfer of a Partners Interest (Sec. 29)
a. The transferee doesnt become the partner of the firm. b. The transferee is entitled to receive the share of profits of the transferring partner. c. If the transferring partner is ceases to be a partner, the transferee is entitled the share of assets which the transferring partner entitled.
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RIGHTS OF AN OUTGOING PA RT N E R Restraint of trade. To carry on competing business. To share subsequent profits. Revocation of counting guarantee by change in firms.
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DISSOLUTION The ending of a firm by the break up of
the relation of partnership between all

the parties
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THE GROUNDS OF DI SSOLUTI ON

1. By Agreement 2. Compulsory dissolution 3. On the happening of certain Contingencies 4. By Notice
5. Dissolution by the court
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BY AGREEMENT
A firm may be dissolved any time with the consent of all the partners of the firm.
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C O M P U L S O RY D I S S O LU T I ON
by the adjudication of all the partners or all the partners but one as insolvent, or by the happening of any event which makes the business of the firm unlawful
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ON THE HAPPENING OF C E RTA I N C O N T I N G E N C I E S

If constituted for a fixed term, by the expiry of that term; If constituted to carry out one or more adventures or undertakings, by the completion thereof; By the death of a partner; and
By the adjudication of a partner as an insolvent.
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BY NOTICE
Where the partnership is at will, the firm may be dissolved by any partner giving notice in the writing to all other partners of his
intention to dissolve the firm.
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DISSOLUTION BY THE COURT (a) Insanity (b) Permanent Incapacity (c) Guilty conduct (d) Persistent Breach of Agreement
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DISSOLUTION BY THE COURT (e) Transfer of whole Interest (f) Loss (g) Just and Equitable clause
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T H E C O N S E QU E N C E S O F D I S S O LU T I O N
1.
Acts done after dissolution
2. Winding up 3. Continuing Authority of Partners for Purpose of Winding up
4. Personal profits earned after Dissolution
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THE CONSEQUENCES OF DISSOLUTION

5. Return of Premium a. The dissolution is mainly due to his own misconduct, or b. The dissolution is in pursuance of an agreement containing no provision for the return of the premium or any part of it.-
Sec.51.
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THE CONSEQUENCES OF DISSOLUTION

6. Rescission for Fraud or Misrepresentation 7. Right to Restrain from use of Firm-name or Firm Property 8. Agreements in Restrain of Trade
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M O D E O F S E T T L I N G O F AC C O U N T S U P O N D I S S O LU T I O N 1. Losses are to be paid in 3 ways Profit Capital Proportion of profit sharing
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M O D E O F S E T T L I N G O F AC C O U N T S UPON DISSOLUTION
2. The assets of the firm contributed by the partners to make up deficiencies
of capital, shall be applied in following manner: In paying the debts of the firm to third parties. In paying to each partner ratably what is due to him distinguished from capital In paying to each partner ratably what is due to him on account of capital. The residue- Sec (b)
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M O D E O F S E T T L I N G O F AC C O U N T S UPON DISSOLUTION
3. If a partner becomes insolvent, the capital of solvent partners cannot be returned in full. 4. Payment of the firm debts and of separate debts
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S A L E S O F G O O DW I L L A F T E R D I S S O LU T I O N
Goodwill is a part of property of the firm
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R I G H T S O F BU Y E R A N D S E L L E R O F G O O DW I L L
The purchaser of goodwill gets the exclusive rights to represent himself as carrying on the old business and to use
the name of old firm

The seller of goodwill may advertise the business. The right is given by sec 55 (2) of partnership act.
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RIGHTS OF BUYER AND SELLER OF GOODWILL

To protect the buyer of goodwill in case of competition with the partners of the old firm sec 55 (2) provides that a partner or partners
cannota. Use the firm name b. Represent himself as carrying on the business of the firm c. Solicit the custom of the persons who were dealing with the firm
70
AG R E E M E N T I N R E S T R A I N T OF TRADE
The buyer of goodwill may further protect himself from the competition with the partners of the old partners by entering
into an agreement with any partner prohibiting such partner

from carrying on any business similar to that of the firm within a specified period or within specified local period. Sec 55 (3)
71
Thank you. Thank you.
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BUSINESS LAW

Business Law, Scintilla

Partnership is the relation between persons who have agreed

to share the profits of the business.

Business Law, Scintilla

Voluntary Agreement Sharing of Profits of Business Mutual Agency

Business Law, Scintilla

Agreement between two or more persons

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

Creditor taking a share of profits

Business Law, Scintilla

Employee getting share of profits

Business Law, Scintilla

Share of profits given to workers as bonus

Business Law, Scintilla

Business Law, Scintilla

Who can be partners? ??????

Business Law, Scintilla

Business Law, Scintilla

WHO CAN BE PARTNER?

Business Law, Scintilla

1. always implies a business

1. may exist without any business

Business Law, Scintilla

2. Authority of members 2. only firm manager

Business Law, Scintilla

10. has no effect

10. dissolves the firm

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

They must not select a name which will fraudulently

They cannot use words like president , Royal etc.

Business Law, Scintilla

CLASSES OF PARTNERSHIP 1. Partnership at will :When the partnership is not

2. Particular partnership/joint venture 3. Limited partnership

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

T H E PA RT N E R S H I P AG R E E M E N T I. Name and addresses of the partners.

Business Law, Scintilla

Business Law, Scintilla

III. The date

Business Law, Scintilla

TI ME FOR REGI STRATI ON

Consequence of non registration:

Unregistered firm cannot file a suit

Business Law, Scintilla

Business Law, Scintilla

Business Law, Scintilla

the each other. Sec 9

Business Law, Scintilla

Business Law, Scintilla

and copy any of the books of the farm.

Business Law, Scintilla

shall contribute equally to the losses.

Business Law, Scintilla

B. If a partner run same business like there

Business Law, Scintilla