Business Law - Relations of Partners

Description

Chapter 3: The Indian Partnership Act, 1932

UNIT – 2: RELATIONS OF PARTNERS

After studying this unit, you would be able to understand-

1. Be familiar with the legal provisions regulating relation of partners’ interest as well as relations with the third parties.

2. Note the scope of implied authority of a partner to bind the partnership by his acts.

3. Be aware of the various situations in which the constitution of a firm may change and its effect on the rights and duties of the partners.

4. Learn how the share in a partnership is transferred and what shall be the rights and obligations of such transferee.

SUMMARY

The mutual rights and duties of partners are regulated by the contract between them. Such contract need not always be expressed, it may be implied from the course of dealing between the partners (Section 11). Section 12 gives rules regulating the conduct of the business by the partners and Section 13 lay down rules of mutual rights and liabilities. Sections 14 to 17 also contain particular rules which become useful and important while determining the relations of partners to one - another. What is essential to note, however, is that all these rules are subject to contract between the parties.

As regards third parties, a partner is the agent of the firm for all purposes within the scope of the partnership concern. His rights, powers, duties and obligations are in many respects governed by the same rules and principles which apply to the agent. Generally, he may pledge or sell the partnership property; he may buy goods on account of the firm; he may borrow money, contract debt and pay debts on account of the firm; he may draw, make, sign, endorse, accept, transfer, negotiate and get discounted promissory notes, bills of exchange, cheques and other negotiable papers in the name and account of the firm. The implied authority of the partner to bind the firm is restricted to acts usually done in the business of the kind carried on by the firm. He is also empowered under the Act to do certain acts in an emergency so as to bind the firm. The firm, however, is bound only by those acts of a partner which were done by him in his capacity as a partner.

A partner may in some circumstances become liable on equitable grounds for obligations incurred by a co-partner in doing acts in excess of his authority, real or implied. He may also become liable for an unauthorized act of his co-partner on the ground of estoppel.

What You Will Learn!

• Relation of Partners to One Another
• Partnership Property (Section 14)
• Personal Profit Earned by Partners (Section 16)
• Rights and Duties of Partners after a Change in the Firm (Section 17)
• Relation of Partners to Third Parties
• Effect of Admissions by a Partner (Section 23)
• Effect of Notice to Acting Partner (Section 24)
• Liability of Partners to Third Parties
• Rights of Transferee of a Partner's Interest (Section 29)
• Minors Admitted to the Benefits of Partnership (Section 30)
• Legal Consequences of Partner Coming in or Going Out (Section 31-35)
• Rights of Outgoing Partner to Carry on Competing Business (Section 36)
• Rights of Outgoing Partner in Certain Cases to Share Subsequent Profits (Section 37)
• Revocation of Continuing Guarantee by Change in Firm (Section 38)

Who Should Attend!

• CA Foundation Students
• CA Inter Students
• CMA Foundation Students
• CMA Inter Students
• CS Foundation Students
• CS Executive Students
• B Com / BBA Students
• Business Law Students
• Entrepreneurs
• Advocates

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