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A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual
interests. The Indian Partnership
Act, 1932, is a key legislation that governs partnerships in India. Below are
the main features and provisions of the Indian Partnership Act, 1932:
1. Definition
of Partnership (Section 4): The Act defines a partnership as
the relation between persons who have agreed to share profits of a business
carried on by all or any of them acting for all.
2. Formation
of Partnership (Sections 5-9): The Act outlines the
essential elements of a partnership, including an agreement, the purpose of
carrying on a business, and the sharing of profits and losses.
3. Partnership
Deed (Section 9): While not mandatory, it is advisable
for partners to have a written partnership deed. This document typically
outlines the terms and conditions of the partnership, including profit-sharing
ratios, capital contributions, and other relevant details.
4. Nature
of Business (Sections 14-15): Partners are required
to conduct the business of the partnership for a lawful purpose and in a lawful
manner.
5. Rights
and Duties of Partners (Sections 9-28): The Act specifies the
rights and duties of partners, including the right to take part in the conduct
of the business, the duty to act in good faith, and the duty to indemnify for
losses caused by willful neglect or misconduct.
6. Mutual
Agency (Section 18): Each partner is considered an agent of
the firm and the other partners for the purpose of the business of the
partnership.
7. Implied
Authority (Section 19): Partners have implied authority to
carry on the usual business activities, but any act done outside the implied
authority may require the consent of all partners.
8. Sharing
of Profits and Losses (Sections 24-27): In the absence of a
partnership deed specifying the profit-sharing ratio, profits and losses are
generally shared equally among partners.
9. Introduction
and Withdrawal of Capital (Sections 26-27): The Act
provides rules regarding the introduction of capital by partners and the
conditions under which partners can withdraw their capital.
10. Admission
and Retirement of Partners (Sections 31-36): The Act specifies
the procedures for the admission of new partners and the retirement of existing
partners from the partnership.
11.Dissolution
of Partnership (Sections 39-47): The Act outlines the
circumstances under which a partnership may be dissolved, including by mutual
agreement, by court order, or due to the death or insolvency of a partner.
12.Rights
of Outgoing Partners (Sections 37-41): Outgoing partners have
certain rights, including the right to share profits until the date of
dissolution and the right to have the firm's property applied in the payment of
debts.
13.Liability
of Partners (Sections 25-30): The liability of
partners is generally unlimited in a partnership, but the Act does make
provisions for limited liability in certain situations.
