Partnership Act Unit 1 Flashcards
(18 cards)
Define Partnership, Minimum and Maximum No. of partners
A partnership is a relation between two or more persons who have agreed to share profits of a business carried by all or any acting for all.
Minimum - 2
Maximum - 50 (according to Sec 464 of The Companies Act,2013)
Trick -Max, Sec 464 -> 46+4 = 50
Elements & true test of partnership
> Association of two or more persons
>Agreement
Profit Sharing
>Business
>Mutual Agency
Kinds of Partnership
With regards to duration
**
>Partnersip at will
-They don’t set a specific time for how long they’ll be partners and they don’t decide how to end partnership
>Partnership for a fixed period of time
-Created for a fixed period of time
~With regards to the extend of business~
>Particular Partnership *
-Two or more person becomes a partner for any particular adventure or undertaking, these partnerships come to an end on the fullfillment of the purpose. Liability of partners extend only to that particular adventure or undertaking.
>General Partnership*
-Where a partnership is constituted with respect of business in general, Liability of partners extent even after the expiry of partnership
Partnership Deed
> The document i n writing containing the various terms and conditions as to the relationship of the partners to each other .
Should be drafted with care and be stamped according to Stamp Act 1899.
Where Partnership comprises any immovable property must be properly in writing, stamped and registered under Registration Act.
Kinds of Partners
> Active or Ostensible
Sleeping or Dormant
Nominal
Partner for profits only
Incoming Partner
Outgoing Partner
Partner by Holding out/ Estoppel
Sub Partner
Active Partner
A partner by agreement who actively participates in conducting the partnership business. Must give public notice upon retirement to absolve future liability.
Sleeping / Dormant Partner
A partner by agreement who does not actively participate in conducting the partnership business. No public notice is generally required upon retirement (as they weren’t known to be active).
Nominal Partner
Lends their name to the firm without having a real interest. Not entitled to share profits. Liable to third parties for all acts of the firm as if they were a partner.
Partner in Profit Only
Entitled to share profits only. Not liable for losses (between partners). Liable to third parties for all acts of the firm.
Incoming Partner
Admitted as a partner into an existing firm, usually with the consent of all existing partners. Generally not liable for acts/debts of the firm incurred before their admission.
Outgoing / Retiring Partner
A partner who leaves the firm, usually with the consent of all other partners (or as per agreement). Remains liable for acts done before retirement. Must give public notice of retirement to avoid liability for future acts of the firm.
Partner by Estoppel / Holding Out
Sec 8, A person who represents themselves (or knowingly allows representation) as a partner. Becomes liable as a partner to anyone who gave credit to the firm based on that representation.
Sub-Partner
> A person who agrees with an individual partner of a firm to share that partner’s profits derived from the firm.
Is NOT a partner in the main firm itself.
Has NO rights against the main firm.
Is NOT liable for the debts of the main firm.
Their relationship is solely with the partner they made the agreement with.
Receipt of share of profit as a non-partner
> By lender of money to persons engage or about to engage in any business activity
By servant or agent as remuneration
By a widow or child of a deceased partner, as the annuity
By a proper owner or part owner of a business, as consideration for the sale of goodwill or share thereof.
What will be the liability of partners of a particular partnership and general partnership after expiry?
Liability of Partners of Particular partnership comes to an end along with the completition of the particular adventure or undertaking
Liability of Partnres of General Partnership extend even after expiry of partnership.
What are the conditions of a partnership to treat it as a partnership at will?
> No fixed time period
No determination provision
What is the circumstance when a Partnership for a fixed period treated as a Partnership at will?
On expiry of the fixed period partners intented to continue the partnership without new agreement.
A general partnership is different from a Particular Partnership. Elucidate.
Liability of Partnres of General Partnership extend even after expiry of partnership.
Liability of Partners of Particular partnership comes to an end along with the completition of the particular adventure or undertaking.
