Minors admitted to the benefits of a partnership.Minors admitted to the benefits of a partnership.
Minors Admitted to the Benefits of a Partnership
1. Meaning
Minor = A person who has not completed 18 years of age (Section 3 of Indian Majority Act, 1875).
A minor cannot become a full-fledged partner because:
They cannot enter into a contract (Section 30 of IPC/General Law of Contracts).
But they can be “admitted to the benefits of partnership.”
Definition (Section 30, Indian Partnership Act, 1932):
“A minor may be admitted to the benefits of a partnership with the consent of all partners, but he does not become personally liable for the obligations of the firm.”
2. Key Features
| Feature | Explanation |
|---|---|
| Consent of all partners | Required before admitting minor to benefits. |
| No personal liability | Minor is not personally liable for firm’s debts. |
| Share in profits | Minor is entitled to share in profits, not losses beyond capital contribution. |
| Capital Contribution | Minor may contribute capital, but liability is limited to his share. |
| Rights | Minor can inspect books, enjoy profits, and participate in benefits. |
| Discharge | Minor cannot bind the firm by acts or contracts. |
| On attaining majority | Minor can either: |
Become a full partner with consent of all partners.
Withdraw from the partnership and claim share of profits. |
3. Difference from Full Partner
| Aspect | Minor Admitted to Benefits | Full Partner |
|---|---|---|
| Liability | Limited to share in profits/capital | Unlimited (jointly and severally liable) |
| Contractual Capacity | Cannot bind firm | Can bind firm |
| Management | Cannot participate in management | Can manage and make decisions |
| Legal Action | Cannot sue on behalf of firm | Can sue and be sued |
4. Profit and Loss Sharing
Minor is entitled to share of profits earned by firm during minority.
Losses are not charged to minor unless explicitly agreed.
On attaining majority, minor can choose to become partner, after which full liability arises from the date of becoming partner, not before.
5. Case Laws
Laxmi Devi v. Union of India (AIR 1965 Delhi 257)
Minor admitted to benefits of partnership is entitled to profits but not personally liable for debts.
S.V. Sahasranaman v. K. Venkatakrishna (1968)
On attaining majority, minor may ratify partnership and become liable for obligations going forward.
K. Gopalan v. State Bank of India (1973)
Minor’s share in profits can be claimed even if firm incurs losses, but minor cannot be sued for firm’s debts.
6. Important Points
Admission to benefits is by consent – all partners must agree.
Minor’s liability is limited – provides protection to minors from legal risk.
Becoming a partner after majority – minor can either accept full partnership or withdraw.
Cannot bind firm – minor cannot enter contracts that create firm liability.
7. Summary Table
| Aspect | Minor Admitted to Benefits | Full Partner |
|---|---|---|
| Consent | Required from all partners | Not required (already partner) |
| Liability | Limited to share in profits/capital | Unlimited & joint liability |
| Management Rights | No | Yes |
| Share in Profits | Yes | Yes |
| Share in Losses | No (unless agreed) | Yes |
| Ability to Bind Firm | No | Yes |
| Option on Majority | Can become full partner or withdraw | Already partner |
✅ In short:
A minor cannot be a full partner, but may be admitted to the benefits of a partnership with all partners’ consent. They enjoy profits but are not personally liable for debts, and on attaining majority, they may choose to become a full partner or withdraw their share.
RELATED Blog
0 comments