Learning Objectives
Definition of Partnership Formation of Partnership Test of Partnership Partnership and Joint Hindu Family Partnership and co-ownership Registration of Firms Effect of Non- Registration Rights and Duties of a partner Types of Partners Dissolution of Firm
Nature of Partnership
Definition: 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.
Essential Characteristics
Test of Partnership
Mode of creation Admission of new members Minor members Maximum number of members Female members
Authority of members
Liability of members Registration
Mode of creation Business Transfer of interest Number of members Authority of members Partition of property Lien for expenses
Registration of firms
Registration
- name of firm, place of business, date of joining of each partner, names and addresses of each partner etc.
Effect of non-registration
Suits b/w partners and firm Suits b/w firm and third parties
Rights of a partner
Right to take part in Business Right to be consulted Right of access to a/c Share profits Interest on capital Interest on advances
Right to be indemnified
As agent of firm Consent for admission of new partner Right to retire
Duties of a partner
To carry on Business to the greatest common advantage To observe faith To indemnify for fraud To attend diligently Not to claim remuneration To share losses
Types of Partners
Actual Partner Sleeping or Dormant Nominal (lends his name) Partner in profits only Sub-partner(sharing of profits)
Partner by estoppel
Partner by holding out
Dissolution of Firm
Modes of dissolution
Dissolution without the order of Court
Dissolution by agreement Compulsory dissolution(insolvency) Contingencies(term completion, completion of Business objective) By notice (partnership at will)
Dissolution by Court
Insanity or misconduct
Persistent breach of agreement Transfer of interest Business working at a loss
Sale of Goodwill
Sharing of Deficiency(profits, capital,individually) Application of assets(outside debts,advances given by partners, refund of capital, ratio of profit sharing)
Settlement of debts of the firm (first out of property of firm then out of private property)