partenship and LLP Flashcards
Section 6
just bec 2 ppl work 2gether and share profit not mean they are partners.
The true test is, whether there exists ‘mutual agency’ between/among the partners and must comply with all other essentials of Partnership.
so servant master, principal agent and all are not partners
cox v hickman
Section 6
just bec 2 ppl work 2gether and share profit not mean they are partners.
The true test is, whether there exists ‘mutual agency’ between/among the partners and must comply with all other essentials of Partnership.
so servant master, principal agent and all are not partners
cox v hickman
KINDS OF PARTNERSHIP
A. Partnership at Will (Section 7)- partnership for a duration specified
B. Particular Partnership (Section 8)- partnership for a task specified
rights of partners
section 12 right to take part in firms business, express opinion, access books of firm
section13 right to profit, right to interest on capital, interest on capital advanced to firm, right to indemnity=if one partner advances payment or incurs liability on behalf of firm, firm will indemnify him
Sec31 rightto prevent introduction of new person as partner
Sec32 right to retire w consent of other partners
Sec33 right to not get expelled unless on certain grounds AFTER warning
Sec44 rigght to dissolve partnership
DUTIES of partners
Section 9 Duty of carrying business in: greatest common advantage, good faith and to render: true accounts and full information
sec11 to not carry out another business
sec12 duty to act diligently
sec13 to perform without remuneration, to share losses, to indemnify the firm for losses caused by his personal willful neglect
duty to not assign rights and to act within authority
Sec 14, 15 using property of the firm only for business of the firm
sec16 duty to account private profits, to not compete
Types of partners
Active/ managing partner conducts business daily. This partner is also called an ostensible partner.
ii.Sleeping/Dormant: He does not participate in the conduct of the business but he is bound by the conduct of all the partners.
iii.Nominal partner: He is a partner to the firm only by his name. In reality, he has no significant or real interest in the firm.
iv. Partner in profit only: The partner who agrees to share the profit but does not suffer losses. He is not liable for any liabilities in case of dealing with the third party.
v. Minor partner: A minor cannot be a partner according to the Indian Contract Act, but he can be admitted to get the benefit of all the partners gives the consent. His will share the profit equally but his liability will be limited in case of loss of the firm.
vi. Partner by estoppel: it means when the person is not a partner but he has represented himself by conduct, or words to another person to be the partner then he cannot deny afterwards. Even though he is not a partner but he becomes the partner by holding out or by estoppel.
PARTNERS AS MUTUAL AGENTS
Sec18, 19 implied authority of partner as an agent of firm which is binding on the firm
Sec20 extension or restriction of partners implied authority
Sec21 partners authority in emergency
Sec 22 specifies that if any act is done by any partner to bind the firm, then it must be done in the name of the firm or in such manner which binds the firm.
sec25 joint and several liability
he liability of all partners is joint and several even if the act of the firm is done by one of them.
A third party can bring an action against any one of them severally, or against two or more of them jointly. No partner can claim that action should be brought against others also. If a partner is made to pay more than his share of liability, he can subsequently claim contribution from his fellow partners.
MINOR IN FIRM
sec30
rights- share profit, share of property, inspect accounts of firm and take copy of accounts
liability- none personally, but share of minor in firm is liable
Sec30 (5)- minors option on attaining majority within six months must make announcement wether joining firm or not otherwise on the lapse of six months will automatically become partner of firm.
sec30(7) if shooses to be partner then liabile for any acts done after date of notce and share of profit remains same unless altered
Sec30(8)- if choose no partner then not liable and can sue for share of property he is entitled to
incoming and outgoing partners
(Section 32)Retirement of a Partner
(Section 33)Expulsion of a Partner
(Section 34) Insolvency of a Partner
(Section 35)Liability of estate of deceased Partner
(Sections 36 and 37)Rights of the outgoing partners
- outgoing partner has certain restriction like he cannot conduct business in firms name, cannot solicit firms clients, cannot represent himself as member and restraint of trade.
- sec37 person dies or becomes an outgoing partner due to any other reason, and the firm
still continues to exist and work, such person or his estate through his legal representatives are entitled to the shares in profits made after the person ceased to become a member.
* The share of profit shall be either attributable to his property share in the firm or interest of six percent per annum on his share of the property in the firm.
However, this is only the case where there is no final settlement of accounts between both
parties.
Board of Revenue, UP vs Auto Sales, Allahabad
ways of firm dissolution
Dissolution by Agreement -**Section40 **
Sec41 compulsory dissolution on: 1. insolvensy of partners 2. for conducting unlawful business
Section 42 – Dissolution on the happening of certain contingencies- if the firm was made for a specific time period or purpose, death of partner, insolvensy
Section 43 – Dissolution by notice of partnership at will and notice must be given in writing
Sec44 dissolution by COURT -
sec44
dissolution of firm by court if
Unsoundness of Mind of a Partner;
ii. Permanent Incapacity of a Partner to Perform his Duties;
iii. Partner’s conduct injurious to partnership business;
iv. Partner’s persistent breach of partnership agreement;
v. Transfer of the whole of a partner’s interest;
vi. If the partnership business can be carried on only at a loss;
vii. If dissolution of firm is just and equitable
BK kapoor v Tajinder kapoor
45-47
(Section 45)Liability for Acts Done After Dissolution
(Section 46)Right of Partners to have Business Wound Up after Dissolution
Section 47 – Continuing Authority of partners for purposes of winding up
define partnership
2 defines a partnership as a relation between two or more persons
who agree to share the profits of a business run by them all or by one or more persons acting for them
all. It functions as a sole proprietorship’s extension
