https://www.allexamnotes.com/2020/10/partnership/
https://www.allexamnotes.com/2020/10/rights-of-partner/
Touchstone of Partnership
Overview
Determining whether a group of individuals are in a partnership involves several key factors. A partnership must be based on a mutual agreement, either verbal or written, and partners must have access to the firm’s books of accounts. The group should consist of 2 to 20 members (or up to 10 in banking). Partners share profits, participate in business activities, and have the right to be involved in decision-making. The business must be legal, and partners have specific rights and duties, including managing the firm, accessing accounts, and sharing profits and losses proportionately. These elements collectively define the essence of a partnership.
Meaning and Definition
It is usually difficult to assess whether a group of persons are in partnership or not. Sometimes, people. claim that they are not working under partnership but the business conditions prove that they are partners. Similarly, some people claiming to be partners prove not to be, after deep analysis. To determine, whether a group of persons are partners or not, the mutual relation between them has to be studied.
Agreement between Parties
A partnership exists based on a contract, whether verbal or in writing. A partnership that does not arise by this rule cannot be called a Partnership.
Access to Books of Accounts
Only that group of persons has the right to be called partners, who have the right to access books of accounts of the firm, otherwise, he cannot be a partner.
Number of Members
When there are more than 20 members, (10 in the case of banking business), or less than 2 members, then such a group of members or a member cannot form a partnership.
Sharing of Profits
Under Sec. 4 of the Act, it is made clear that each partner of the firm has the right to receive a share of the profits of the firm. If the group of members makes provision for giving a share of profit to each member, it shall be called a Partnership.
Carrying on Business
It is also necessary for a partnership that two or more members carry on business on the basis of a mutual agreement. The objective of a partnership should be to carry on business; otherwise, it cannot be called a partnership. For example, if, two or more persons purchase a commodity or a property and divide it among themselves, they shall be called co-owners and not partners.
Right to Participate in Decision Making
Another feature of partnership is that each partner has the right to participate in the management and administration of the firm.
Legality of Business
If the business of the members is illegal, it cannot form a partnership because the objective of a partnership contract is to carry on a legal business.
Rights of Partners
The partners possess the following rights under the Partnership
- To participate in the management of the firm.
- Right to access Books of Accounts anytime.
- To express his opinion on the affairs of business.
- Right of indemnity of loss.
- Right to receive a share of profit.
- Joint ownership of the property of the firm with other partners.
- Right, to receive a proportionate share of profit on termination of partnership.
https://www.allexamnotes.com/2020/10/rights-of-partner/
The partners of a firm have the following duties and liabilities -
- To perform the activities of the firm with dedication.
- To compensate the firm for any loss caused knowingly.
- To utilize the property of the firm for its business only and not for personal use.
- To work under the scope of authority granted
- To appoint a new partner only with the consent of all other partners.
- To distribute profits and losses in the proportionate ratio.
- Not to misuse the powers granted to them.