PRESENTED BYYOGESH MBA- 1st sem(evening) section-A Enrol.

no: 03680303913

THE INDIAN PARTNERSHIP ACT 1932

Section.4 of the Indian Partnership Act, 1932 defines Partnership in the following terms: Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

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Simply speaking, a partnership is an association of persons who conduct some business activity and agree to share profits earned out of it. Acc to Indian Partnership Act: Partnership is the relation between two or more persons who have agreed to share the profit of a business carried on by all of them or any of them acting for all.

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Essential elements of Partnership

Two or more persons

Sharing of profit

Mutual agency

An agreement

Business

For forming a partnership the above elements should be present. Though each element is important.

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ESSENTIAL ELEMENTS OF A PARTNERSHIP

a.) AGREEMENT: There must be a contract.

b.) Between two or more persons.

c.) Who agree to carry on business. d.) With the object of sharing profits. e.) The business must be carried on by all or any of them acting for all.

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FORMATION OF PARTNERSHIP
May be formed by oral & written agreement. All essential of valid contract must be present Mutual rights & obligation to be in partnership deed. The deed to be registered.

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Contents of partnership Deed

However, a Partnership Deed should contain the following clause: Name of the firm, Name of the partners Nature and place of business Duration of partnership Capital Share of partners in profits and losses Bank Account firm, Books of account Rules as to admission, expulsion, retirement of partners Powers of partners Dissolution of firm Settlement of disputes
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REGISTRATION OF FIRMS
Under the partnership Act, it is not compulsory for every partnership firm to get itself registered. But an unregistered firm suffers from a number of disabilities. An application in the prescribed format along with the prescribed fees has to be submitted to the Registrar of firms of the State in which the place of business of the firm is situated. The application must be signed by all the partners and must contain the following particulars: a.) The name of the firm. b.) The place of business of the firm. c.) The names of any other places where the business of the firm is carried on. d.) The date when each partner joined the firm. e.) The names in full and permanent addresses of the partners.

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Effect of non registration

1. No suit in civil court by a partner against the firm or other partners. 2. No suit in a civil court by a firm against the parties. 3. The firm or its partners cannot make a claim of setoff or other proceeding based upon a contract.

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There may be different kinds of partners in a partnership firm. The important classification of partners is given below: Actual or active partners, Dormant or sleeping partner, Nominal partner, Partner in profits only, Sub-partner, Partner by estoppel or by holding out.
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Active partnerActively participates in the conduct of

the business .

Sleeping PartnerDoesnt take active part

Nominal PartnerA partner who lends his name to the
firm without having any real interest in it.

Sub-PartnerWhen a partner agrees to share his profits

derived from the firm with a third person, a subpartnership may arise. The third person is called as sub partner.
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On the Basis of Duration

Partnership at Will (Sec.7)

Particular Partnership (Sec.8)

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TYPES OF PARTNERSHIP:
1. Partnership at will: Where no provision is made by contract between the partners for the duration of their partnership, the partnership is partnership at will. The essence of a partnership at will is that the partners do not fix any term of partnership and are free to break their relationship at their own sweet will. It is a partnership for an indefinite period.
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2. Particular partnership:
When a partnership is formed for a particular period or for a particular venture, it is called particular partnership. In such a case, the partnership is automatically dissolved at the expiry of the fixed term or on the completion of the venture.
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Rights of Partners
1.Right to take part in the conduct of the business. 2. Right to be consulted. 3. Right to access the books. 4. Right to share the profits. 5. Right to interest on capital 6. Right to interest on advances. 7. Right to indemnity.
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To carry on business to the greater advantage To be faithful To render true accounts To give full information To indemnify for fraud Duty to share losses To act within authority To be liable for the act of the firm

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Dissolution of the Firm

Section. 39 provides that the dissolution of partnership between all the partners of a firm is called dissolution of the firm. Modes of dissolution A firm may be dissolved in any one of the following ways: 1. 2. 3. 4. 5. By Agreement: By Notice On the happening of certain contingencies Compulsory Dissolution Dissolution by the Court

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1. By Agreement: A firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. Partnership is created by a contract, it can also be terminated by a contract. 2. By notice: Where the partnership is at will, the firm may be dissolved by any partner giving the notice in writing to all the other partners of his intention to dissolve the firm. A notice of dissolution once given cannot be withdrawn without the consent of all the other partners.
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3. On the happening of certain contingencies: Subject to a contract between the partners, a firm may be dissolved if: a.) if constituted for a fixed term, by the expiry of that term. b.) If constituted to carry out one or more adventures or undertakings, by the completion thereof. c.) By the death of the partner. d.) By the adjudication of partner as an insolvent.
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4. Compulsory Dissolution: A firm may be

compulsorily dissolved if: a.) When all the partners, or all the partners but one, are adjudged insolvent. b.) When some event has happened which makes it unlawful for the business of the firm to be carried on.

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5. Dissolution by the Court: Dissolution by the court is necessitated when there is a difference of opinion between the partners regarding the matter of dissolution in cases of: a.) Insanity b.) Permanent Incapacity c.) Misconduct d.) Persistent breach of agreement e.) Transfer of interest f.) Just and Equitable
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Recent Amendments To Partnership Act

The recent amendments in Indian Partnership Act is LIMITED LIABILITY OF PARTNERSHIP in year 2008. Limited Liability Partnership (LLP) is a new corporate structure that combines the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. In other words, it is an alternative corporate business vehicle that provides the benefits of limited liability of a company, but allows its members the flexibility of organising their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in general, and for the enterprises in services sector, in particular. Internationally, LLPs are the preferred vehicle of business, particularly for service industry or for activities involving professionals.
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For Carefully listening