Rights and duties of partners
š Rights and Duties of Partners
1. Rights of Partners
(a) Right to Take Part in Business
Every partner has the right to participate in the conduct and management of the partnership business unless agreed otherwise.
Example: A partner can attend meetings, make decisions jointly, and work for the firm's benefit.
(b) Right to Share Profits and Losses
Partners share profits and losses equally unless the partnership deed specifies otherwise.
Profit sharing is proportional to the agreement or equally by default.
(c) Right to be Indemnified
A partner has the right to be reimbursed for any expenses or liabilities incurred for the firmās business.
(d) Right to Access Books of Accounts
Every partner can inspect and copy the firmās books of accounts at any reasonable time.
Transparency is ensured so that partners know the financial position.
(e) Right to be Consulted
Partners must be consulted on important decisions unless agreed that some partners have authority to decide.
(f) Right to Dissolve the Firm
Partners have the right to dissolve the firm according to terms laid out in the partnership deed or the law.
(g) Right to Carry on Competing Business
Generally, a partner cannot carry on a business that competes with the firm without consent of other partners.
2. Duties of Partners
(a) Duty to Act Honestly and in Good Faith
Partners must act in good faith and with loyalty towards the firm and other partners.
They must avoid conflict of interest.
(b) Duty to Render True Accounts and Full Information
Partners must provide complete information regarding all things affecting the firm to other partners.
(c) Duty to Account for Personal Profits
Partners cannot make secret profits or gain at the firmās expense.
Any profit made related to the firmās business belongs to the firm.
(d) Duty to Indemnify the Firm
If a partner causes loss to the firm due to negligence or misconduct, they must indemnify the firm.
(e) Duty to Participate in the Business
Partners should take active part in the firmās business as agreed upon or reasonably expected.
(f) Duty Not to Compete Without Consent
Partners must not start or work in a competing business without permission.
š§¾ Legal Provisions in the Indian Partnership Act, 1932
| Rights | Section | Summary |
|---|---|---|
| Share profits | Section 13 | Equal sharing unless agreed otherwise |
| Inspect books | Section 19 | Right to inspect and copy accounts |
| Take part in management | Section 13 | Right to be involved in business decisions |
| Duties | Section | Summary |
|---|---|---|
| Act in good faith | Section 18 | Partners must act honestly and with loyalty |
| Render accounts | Section 19 | Duty to provide full information |
| No secret profits | Section 18 | Duty not to make secret gains |
Case Law Highlight:
Mohan Lal v. K.C. Mohan Lal, AIR 1936 All 56
Partner must disclose any profit made from firmās business and cannot keep it secret.
Khanna & Co. v. Union of India, AIR 1960 SC 830
Emphasized partnersā duty of loyalty and acting in good faith.
Summary Table:
| Rights | Duties |
|---|---|
| Participate in business management | Act honestly and in good faith |
| Share profits and losses | Render true accounts and info |
| Inspect books of accounts | Not make secret profits |
| Right to indemnity for expenses | Not compete without consent |
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