RELATIONS OF PARTNER INTER SE

📚 Table of Contents

General Duties of Partners

The general duties of partners are:

• Carry on the business for the greatest common advantage – Section 9
• Be just and faithful to each other – Section 9
• Render true accounts – Section 9
• Provide full information on matters affecting the firm – Section 9
• Indemnify the firm for losses due to their fraud – Section 10
• Diligently attend duties in business conduct – Section 12(b)
• Indemnify firm for losses from willful neglect – Section 13(f)
• Proper use of firm’s property – Section 15

Rights of the Partners

As per Sections 12 and 13, every partner is entitled to certain rights which enable participation and fair treatment:

• Take part in conduct of business – Section 12(a)
• Express opinion in business matters – Section 12(c)
• Access to books and records – Section 12(d)
• Share in profits – Section 13(b)
• Receive interest on profits – Section 13(c)
• Get interest @6% p.a. on capital (if not fixed) – Section 13(d)
• Indemnification for firm-related liabilities – Section 13(f)

Determination of Rights & Duties – Section 11

Section 11 provides that:

1. The mutual rights and duties of the partner may be determined by express or implied contract by them. Consent of all partners are necessary in such a contract
2. Agreements in restraint of trade can also be made by partners.

Personal Profits by a Partner – Section 16

Section 16 ensures that any personal gains made by a partner in the firm’s name rightfully belong to the firm. Section 16 provides that:

• • If any partner earn personal profits on name of the firm then he should pay back it to the firm.
  • If a partner carry on other business of same nature and competing with the first business, then he must share the profit and pay to the firm all profits he earned by competing business.

Case Law: Gordon vs Holland (38 N.C. 362) – In this case a partner sold the land belonging to the firm to a bona fide purchaser and then repurchased the land. It was held that the partner is liable to share the profit earned by him on repurchase.

Section 17: Change, Expiry & Additional Undertakings

Section 17 provides the right and duties of partner in following cases:

1. Change in the firm- When a change occurs in the firm , the mutual rights and duties of the partners in the reconstituted firm remains the same.
2. Expiry of term- Where a firm constituted for a fixed term continues to carry on business after the expiry of term, the mutual rights and duties of partner remains ame.
3. Additional undertaking- 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 undertaking.

References:

1. Indian Partnership Act, 1932
2. Law of Contract-II by Dr. R.K. Bangia