The Indian Partnership Act 1932

• Indian Partnership Act, 1932 received the assent

of the Governor-General on 8th April 1932 and
came into force on the 1st day of October, 1932
• Section.4 of the Indian Partnership Act, 1932
defines Partnership in the following terms: “
Partnership is the relation between persons who
have agreed to share the profits of a business
carried on by all or any of them acting for all.”
• Person entered into partnership individually are
called partners , Collectively Firm.
 MEANING AND NATURE OF
PARTNERSHIP
• Association of two or more persons
• Result of an agreement between two or more persons.
• Agreement must be to share profit of the business.
• Business must be carried on by all or any of them
acting for all.
• Unlimited liability.
• Restriction on transfer of interest.
• Unanimity of consent.
• Agreement must be to carry on some business
 FORMATION OF PARTNERSHIP
• In a contract of partnership all the elements of a valid contract must be
• present.
• There must be free consent,
consideration, lawful object and the parties must have capacity to
contract. Thus an alien friend can enter into
partnership, an alien enemy cannot. A minor is
not competent to be a partner. A minor can, however, be admitted to
the benefits of partnership, if all the partners agree to do so.
A partnership agreement may be oral or it may be
implied or inferred from the conduct
of the parties. When it is reduced to writing it is incorporated in a docume
nt known as the
Deed of Partnership or Articles of Partnership. The deed must be stampe
d according to the provisions of
the Stamp Act. Thereafter, the firm may be registered with the Registrar
of Firms, although registration is not
compulsory. Because of the disabilities suffered by an
unregistered firm, it is advisable to register every firm
• .According to S.58 the registration should be made in the form of a
Statement signed by all the partners and giving :
• (1) the name of the firm;
• (2) the principal place of business of the firm;
•
• (3) name of the other place (if any) where the firm carries on busin
ess;
• (4) the date on which each partner joined the firm;
• (5) the names in full and addresses of the partners;
• (6) the duration of the firm. Furthermore, every change in the nam
es and addresses of the partners
or place of business should be notified to the Registrar of Firms fro
m time to time
 Types of partnership
• Active partner
• Sleeping partner
• Nominal partner
• Partner by estoppel
• Outgoing partner
• Incoming partner
• Sub partner
• Partner in profits only
 Active and sleeping
• Active- Engaged in actual conduct of the business
• His acts binds the firm and other partners
• Notice to be given in case of retirement
• Sleeping or Dormant Partner
• Does not take part in the conduct of business
• Contributes his share of capital and enjoys profits
and losses
• Not known to outside world
• liable to third parties for the acts of the firm
• Not required to give notice in case of retirement
 Nominal Partners
• No real interest in business, Does not
contribute any capital, Lends his name only
• No share in profits but liable to third parties
for all acts of the firm
• Partner in Profits only
• Shares the profits but not losses
• No interest in the management of the firm
• Liability for the acts of the firm is unlimited
 Incoming & outgoing
• No person shall be introduced as a partner into
the firm without the consent of all existing
partners
• A person who is introduced as a partner into a
firm does not thereby become liable for any act
of the firm done before he becomes partner
• A person may retire with the consent of all other
partners in accordance with an express
agreement by the partners or where the
partnership is at will by giving notice in written to
all the other partners of his intension to retire
Partner by Estoppel or Holding Out
• Represents himself as a Partner, by words
spoken or written or by conduct liable as a
partner if credit is given to the firm based on
his representation. He cannot deny.If a
partner does not give public notice and his
name is still used in the business, he is also
liable to third parties
• Deceased partner is an exception to this rule.
 TYPES OF PARTNERSHIP
• ON THE BASIS OF DURATION
• Partnership at will
• Partnership for a fixed period
• ON THE BASIS OF EXTEND OF BUSINESS
• PARTICULAR PARTNERSHIP
• GENERAL PARTNERSHIP
 DISSOLUTION OF FIRM AND
PARTNERSHIP RIGHTS
• Sec 39 “dissolution of partnership between all
the partners of a firm is called the dissolution
of firm
• Dissolution of partnership.
• Dissolution of firm.
• Dissolution by court
 DISSOLUTION OF PARTNERSHIP
• Expiry of term.
• Completion of adventure
• Death of a partner.insolvency of partner.
• Retirement of a partner
 DISSOLUTION OF FIRM
By mutual consent.
By agreement.
By the insolvency of all the partners.
Business becoming illegal