PROPERTY OF THE FIRM (Sec.

14)

Click to edit Master subtitle style

Ravi chouhan

215111061

4/14/12

It is up to the partners of the firm to determine by agreement that what shall be the property of the firm and what shall be the separate property of one or more of the partners. If there is no express agreement then the source from which the 4/14/12 property was

In the absence of the contract 1. All property originally brought into the common stock

of the firm.
2. All rights or interest in the property, so brought. 3. All property acquired for or by the firm and all rights

and interest in any property so acquired.

4. All property acquired for the purpose of the business of

the firm and all rights and interest in any property so acquired.
5. Goodwill of the business of the firm(Sec. 14 para 1).
4/14/12

GOODWILL
Property of a firm includes the goodwill of the business

(Sec. 14).
Goodwill is the value of reputation and connection which

the firm establishes over time due to its integrity, efficient service to the customers, quality of its products etc.
Goodwill is also the sap and life of the business, without

which the business would yield little or no fruit.

4/14/12

Agreement between partners in restraint of trade

According to Section 27, every agreement by which

anyone is restrained from exercising, a lawful profession, trade or business of any kind, void.
But the partners of a firm may agree that a partner shall

not carry on any business other than that of the firm while he is a partner [Sec. 11 (2)].
If a partner carries on any business of same nature,

competing with that of the firm, he has to account for and pay to the firm all profits made by him in that business. 4/14/12

Exceptions to the general rule A partner shall not carry on any business other than

that of the firm while he is a partner[Sec. 11(2)].

An outgoing partner may agree with his partners not to

carry on a business similar to that of the firm within a specified period or within specified local limits[Sec.36(2)].
Upon anticipation of the dissolution of the firm,

partners may make an agreement that some or all of them will not carry on a business similar to that of the firm within a specified period or within specified local limits(Sec.54).
4/14/12

Exceptions to the general rule (cont.)

Where the goodwill of the firm is sold after dissolution, a partner may carry on a business competing with that of the buyer and he may advertise such business.

Upon the sale of the goodwill of the firm, any

partner may make an agreement with the buyer that such partner will not carry on any business similar to that of the firm within a specified period or specified local limits[ Sec. 55(3)].
4/14/12

RELATION OF PARTNERS TO THIRD PARTIES

4/14/12

Implied authority of a partner

May be Express authority. May be Implied authority. 1. The act done must relate to the usual business

of the firm.
2. The act must be such as is done within the

scope of the business of the firm in the usual way.

3. The act must be done in the name of the firm.
4/14/12

Acts within the implied authority of a partner:

Purchasing goods (in which the firm deals). Selling the goods of the firm. Receiving payments of the debts due to the firm. Settling accounts with the persons dealing with the firm. Engaging servants for the partnership business. Borrowing money on the credit of the firm. Drawing, accepting, and indorsing bills in the name of the firm. Pledging any goods of the firm for the purpose of borrowing
4/14/12

The implied authority does not empower a partner 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. Compromise any claim or portion of a claim by the firm. Withdraw a suit on behalf of the firm. Admit any liability in a suit or proceeding against the firm. Acquire immovable property on behalf of the firm. Transfer immovable property belonging to the firm.
4/14/12

Partners authority in an emergency (Sec. 21)

1.

They are done to protect the firm from loss. The partner acts as a prudent person would act under similar circumstances in his own case.

1.

4/14/12

Implied authority and third parties

1.

Extension and restriction of a partners implied authority (Sec. 20).

2. Effect of admission by a partner (Sec. 23). 3. Effect of notice to an acting partner (Sec. 24). 4. Liability of a partner for acts of the firm (Sec. 25). 5. Liability of the firm for the wrongful acts of a

partner (Sec. 26).

4/14/12