Law Part Partners Forbidden by Law: 1.

The partnership always consists of two to twenty partners, though the government or the state, according to the Companies Act 1956 prohibits the continuation of the business with the external sources with ten or more partners in some cases. It is because if the company does the banking business with more than ten or twenty people, then the business wouldnt remain a partnership business; rather a company would have to be formed. 2. If the partnership is made or created for the reason to do any illegal act or trade, then the agreement would become void. Example- If a partnership is formed, using the same name of any other partnership business to carry on trade with others in an illegal way, thus the agreement between the partners is void, as because they are doing a prohibited trade. Registration of firm: The Partnership Act is a complementary to the Contract Act and it thus follows some of the rules followed in that of the Contract Act, and that would be the following: a) mutual and free consent, b) legally enforceable agreement, c) parties competent to contract, d) lawful agreement, etc. Though the registration of a firm isnt a necessity as it isnt considered as an illegal, but if registration wouldnt be done, the firm suffers from certain drawbacks and opportunities. Thus registration of a partnership firm is thus needed by the firms for their smooth running of the business. The registration of a Partnership firm could be done anytime, by sending the document through post or passing it to the Registrar of Firms of that particular area, where the firm is situated. The document would be registered if the firm would send a fee along with the statement that would include the following, which would be signed by all the partners: The name of the firm, The actual place where the firm is situated or located along with the address, The names of all the places where the firm carries on their business activity other than the prime location, The date at which all the partners had joined the firm to start their business, The names of the partners and also their present address, and these information would have to be authentic, The time duration of the firm, i.e. how long the firm would continue their operations, If the partners wouldnt be able to sign the document or the statement, then their agents would sign it on their behalf, and each of the partners would verify this statement in the manner that would be provided by the state. Though the above would be mentioned, but the firm shouldnt contain the following features:

1. The name of the firm must not contain the terms or words like Crown, Empire, etc, which would seem that the firm is gaining some advantage from the state. 2. Also, the firm shouldnt use or select a name which would illegally imply that the firm is the same of that other particular firm which has the same name. If, after the statement had been submitted to the Registrar and if the registrar is satisfied with all the information provided then he or she would record an entry of the statement in the register and thus the firm would become listed. But if any of the information would be altered or changed, e.g. the introduction of a new partner or the address of the new partner, etc. then the alteration would be informed to the Registrar in a new statement and the registrar would verify it, and if he would be satisfied, then the registrar would enter it into the register again, with the new alterations. Problems of Non-registration of firms: If a firm doesnt do registration, though it would still be able to continue their business legally, but there are some disadvantages, such as: A partner of an unregistered firm cant sue another partner or the firm for enforcing any right mentioned in the contract of their partnership. This cant be done unless the partnership firm is registered, and the name of the partner on whom the other partner is suing is mentioned in the document or the statement submitted to the Registrar. Though the criminal proceedings about a partner could be filed, who had done any crime or fraud, but not anything regarding the civil acts, or to enforce any right mentioned in the statement. The unregistered firm cannot sue a third party who had done business with them. It means that the unregistered firm cannot sue the third party to claim for any damages or set off or compensation that had arisen from their business transaction, or for any rights mentioned in their contract. Also, the third party cannot sue an unregistered firm for claiming a set off or to enforce any rights that are mentioned in their contract, which was made while they were doing business. But there are some special cases where the firm can file a suit even though they are not a registered firm: If any criminal activity had taken place, or any fraud had occurred, then the firm could be sued or the third party could sue the unregistered firm. A partner of an unregistered firm can file a suit for the dissolution of the firm and also for the accounts maintained in the firm, or to realize the properties of the firm. Also, the Official Assignee or Receiver of court under the Presidency or town insolvency act can realize the property of the insolvent partner even if the firm isnt a registered one. An unregistered firm can file a suit, with the firm not exceeding an amount of Rs.100, but such suit is negligible in todays standards, as the amount is very insignificant. Also, the act doesnt apply to those firms or partners which and who are out of the territories where this act is extended, or if the area of the firm doesnt fall in the list of the areas mentioned under the section.

Also, suit can be filed for the realization of all the properties and accounts of a dissolved firm even though the firm is an unregistered one.