Partnership

Professor &

Lawyer

Puttu Guru

Prasad
 Partnership Act 1932

Partnership is the relation between persons who

have agreed to share the profits of a business carried
on by all or any one of them acting for all
 Content
Essentials element of partnership

Kinds of partners

Types of partnership

Rights of partner

Duties of partner
 Partnership Deed :
Partnership Deed is the document that defines the
rights and obligations of partners. Besides names,
address and occupation of partners it lays down the
duration of partnership, nature of business, profit
sharing ratio, right to interest, salary, commission
etc.
Essential elements of partnership:

Association of two or more persons;

Existence of a contract;

Carrying on a business;

Sharing of profits;

Prevalence of mutual agency.

 Kinds Of Partners
There may be different kinds of partners in a partnership firm.
The important classification of partners is given below:
Active partners,
Sleeping partner,
Nominal partner,
Partner in profits only,
Senior partner,
Junior partner,
Secret partner,
Minor partner.
 'ACTIVE PARTNER'
An invested person who is involved in the daily
operations of the partnership. An active partner
helps run the business to enhance his or her returns
and is therefore considered a material participant.
This person typically shares more risk and return
versus a limited or silent partner.
Sleeping Partner
 sleeping partner

one whose name does not appear in the firm, and

who takes no active part in the business, but who
has an interest in the concern, and shares the
profits, and thereby becomes a partner, either
absolutely, or as respects third persons.
 Nominal Partner

Person who has an interest in the success of

a partnership firm but, legally, is
not partner because he or she neither owns a part of
the firm nor actively participates in its affairs.
Minor Partner
Minor Partners

age below 18
Just profit
No loss
Decide with 6 month
Senior Partner
 senior partner

Investor
Expreience
Partner whose level of involvement (and
the associated authority, responsibility, risks,
and rewards) is greater than that of the junior
partners, and at par with other senior partners.
Junior Partner
 junior partner

A partner in a partnership who is less important

than a senior partner, but may become a
senior partner later.
 Rights Of Partners
Section 12 & 13 of the partnership act
Rights to take part in management
Every partner has a right to take part in the conduct of the business.
Rights to inspect books

Every partner has a right to check the books of account of the firm
and to get the copies.
Rights to be consulted

Every partner has a right to be consulted and heard before any matter
is decided.
Rights to share profit
Every partner has a right to share equally in the profits earned by the
firm, irrespective of his amount of capital contribution.
 Rights to interest on capital
A partner is not entitled to receive interest on capital contributed by him..
Right to use property
Every partner of the firm is co-owner in the property of firm and he has a right
to use it for the best benefit of the business of the allowed.
Rights to admit and expel partner
A new partner cannot be admitted in the firm and an old partner cannot be
expelled from the firm without the prior consent of all the partners.
Right to give opinion
Nature of the partnership business cannot be altered without the prior approval
of all the partners.
 Duties Of Partners:
To work for common advantage
To be faithful
Render true account
To indemnify for fraud
Not to claim remuneration
To share profits and losses
To act within authorities given
Liabilities Of Partners

1. Limited
2. Unlimited
 UNLIMITED LIABILITY'
A type of business where owners share joint and
several responsibility for the entire amount of debt
and other liabilities amassed by the business.
Unlimited liability is not capped at a maximum
amount and exists regardless of the amount of
investment each owner has personally made. If the
business is unable to meet any financial obligations
or settle any outstanding liabilities, the owner's
personal assets can be seized to satisfy the debts.
Limited Liability Partnerships (LLP)

Limited liability partnerships (LLP) retain the tax

advantages of the general partnership form, but
offer some personal liability protection to the
participants. Individual partners in a limited
liability partnership are not personally responsible
for the wrongful acts of other partners, or for the
debts or obligations of the business.