role of a partner in a partnership firm

Topics: Partnership, Contract, John Grisham Pages: 17 (3785 words) Published: April 16, 2014

Indian Partnership Act 1932: Minor as a partner in a Partnership firm



Asst. Prof. Nitesh Upadhyay

Saloni Palkhiwala
Roll no.: 12bblo33
Semester: IV, LLb
Section C


Statement of problem
According to Section 11 of The Indian Contract Act 1872 a minor cannot be a partner in a partnership firm but as per section 30 of The Indian Partnership ACT 1932 he may be admitted to the benefits of partnership and so he has a share in the profits but doesn’t have to incur any loss suffered by the firm which increases the liability of the other partners. Review of Literature

Defining Partnership

The first codification of law of partnership in the modern form was made in the Indian Contract Act 1872( Chapter XI).This chapter consisted of 28 sections in all(sections 239 to 266) which were mainly based on English precedents. With the rapid development of commerce and trade in India those provisions felt insufficient and therefore in 1932 the Indian Partnership Act 1932 was passed substituting Chapter XI of the Indian Contract Act, 1872. This Act came in force with effect from 1st date of October,1932. According to section 1 of the said act it extends to the whole of India (except the State of Jammu and Kashmir).1 Section 4 of the Act defines partnership.

1. The analysis of the definition of partnership reveals the following essentials of Partnership.

(i) An Association of Persons
There must be a contract between two or more persons. Therefore unless there are at least two persons, there cannot be a partnership. According to section 11(1) of the Companies Act 1956 in the case of banking there cannot be more than 10 members in a partnership and in the case of any other business there cannot be more than 20 members in a partnership. If limit exceed that mentioned above such partnership becomes illegal under the Companies Act, 1956.

(ii) A valid contract
Partnership is the result of contract. It can be formed by contract only, express or implied. All the essentials of a valid contract must be fulfilled. So a partnership cannot be formed by two or more minors or between a minor and a competent person. It cannot be formed for carrying on any business the object of which is illegal or opposed to public policy.2

(iii) Relation between partners
Partners are not co-owners of the assets of the firms.3 They are not creditors or debtors to each other unless the balance has been ascertained to be payable from one to other after completion of accounts on dissolution of the firm.

(iv) Agent and Principal (Section 18)
A partner is there agent of the firm for the purpose of the business of the firm. This relationship between the partners is established by the words ‘carried on by all or any of them acting for all’. A partner is an agent in the sense that he can bind the firm and other fellow partners by his acts done in the course of business and he is also a principal of other partners in the sense that he can also be bound by the acts of other partners done in the course of business.

(v) Business
The existence of business is very essential to form a partnership. Business includes trade, occupation or profession according to the definition given in section 2(b). Unless there is business there will be no partnership. This business must be lawful. The idea behind the business in section 2 is to secure gain. Therefore a society formed for the charitable or religious purpose is not a partnership nor is a voluntary association formed for the purpose of holing a function of a social character, a partnership. Co-ownership doesn’t come under the definition of business but only if it carries with it intrinsically the quality of trade or commerce or business.4

(vi) Sharing of profits
Sharing of profits of a business is not...

References: 2. The Indian Partnership Act, 1932
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