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Rights and Duties of Partners

Rights and Duties of Partners

The Rights and Duties of Partners in a Partnership firm are decided on the basis of a mutually determined Partnership deed. Partnership deed is a legal document in which the respective rights and obligations of the partners of a partnership firm is clearly written. In addition to the terms contained in Partnership deed, the Partnership Act, 1932 contains general provisions of the rights and duties of the partners.

Subject to the provisions of the Indian Partnership Act, 1932, the mutual rights and duties of the partners of a firm may be determined by contract between the partners, and such contract may be express or may be implied by a course of dealing.

Such contract may be varied by consent of all the partners, and such consent may be express or may be implied by a course of dealing. Such contracts may provide that a partner shall not carry on any business other than that of the firm while he is a partner.

Mutual Rights and Liabilities –

Subject to contract between the partners—

(a) A partner is not entitled to receive remuneration for taking part in the conduct of the business;

(b) The partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm;

(c) Where a partner is entitled to interest on the capital subscribed by him such interest shall be payable only out of profits;

(d) A partner making, for the purposes of the business, any payment or advance beyond the amount of capital he has agreed to subscribe, is entitled to interest thereon at the rate of six per cent per annum;

(e) The firm shall indemnify a partner in respect of payments made and liabilities incurred by him—

(i) in the ordinary and proper conduct of the business, and

(ii) in doing such act, in an emergency, for the purposes of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under similar circumstances;

General duties of partners –

The duties of partners are as follows –

  1. To carry on the business of the firm to the greatest common advantage
  2. To be just and faithful to each other.
  3. To render true accounts and full information of all things affecting the firm to any partner or his legal representative.
  4. To indemnify for any loss caused to the firm by the reason of his fraud in the conduct of the business.
  5. To attend diligently to his duties in the conduct of the business;

 General Rights of Partners –

  1. Every partner has a right to take-part in the conduct of the business.
  2. Any difference arising as to ordinary matters connected with the business may be decided by majority of the partners, and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in the nature of the business without the consent of all the partners.
  3. Every partner has a right to have access to and to inspect and copy any of the books of the firm.

Personal Profits earned by Partners –

(a) If a partner derives any profit for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm;

(b) If a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business.

Rights and duties of partners after a change in the firm –

Subject to contract between the partners where a change occurs in the constitution of a firm, the mutual rights and duties of the partners in the reconstituted firm remain the same as they were immediately before the change, as far as may be;

Where a firm constituted for a fixed term continues to carry on business after the expiry of that term, the mutual rights and duties of the partners remain the same as they were before the expiry, so far as they may be consistent with the incidents of the partnership at will.

Where a firm constituted to carry out one or more adventures or under­takings carries out other adventures or undertakings, the mutual rights and duties of the partners in respect of the other adventures or undertak­ings are the same as those in respect of the original adventures or undertakings.

Rights and Duties of Partners



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