An activity intended to be done to generate profit results in various forms of businesses. A business can be started by an individual or by group of people. The partnership act 1932 is enacted with the view to give proper directions for persons who decides to start business or any legal activity as joint ventures. The partnership act defines partners, their responsibilities and duties to be performed in a broader sense. A firm can be formed with minimum of two numbers of persons under the partnership act. The persons who form the business are termed as partners. They have equal responsibilities in carrying out the business. They have equal rights and liabilities and the profit and loss is also shared equal among them as the deed agrees. A partnership business can be carried out by all or any one of them acting for all.
There are several factors that determine the nature of a partnership firm or business. A unanimous decision regarding the matters of business among the partners are highly essential. The duties to be discharged, the mutual rights and liabilities, the ratio of sharing profits and loss, the assets incurred or to be incurred, the disposal of liabilities, are to be determined before the formation of a partner ship firm. A legal entity is given by virtue of partnership act 1932. The functioning of the firm will be done according to the conditions and clauses agreed upon by the partners. A minor can also be made a partner in the firm by virtue of section 30 of the act. A minor can be admitted in the firm after getting prior and complete consent from other existing partners of the firm. The minor’s share is liable for the act of the firm but minor will not be personally liable for the act of the firm. A partner cannot be admitted newly in the firm without the proper consent of the existing partners. If a partner is newly admitted in the firm he will not be liable for the liabilities that existed in the firm before his admission. Retirement and expulsion of partners is another important aspect that draws attention in a partnership firm. Retirement of a partner can be done with the consent of existing partners or by an express agreement of the partners. Any act done by any partners on behalf of the firm before the retirement of a partner, the retired partner is liable for the act of the firm. A retirement is the discretion of a partner while expulsion of a partner is done by the existing partners. The expulsion of an existing partner is done by other partners if the conditions of the contract are violated. An expelled partner will be treated as a retired partner as subsection 2, 3, 4, of section 32 is applicable to him. An outgoing partner shall not use the firm name or any of the activities carried out by the firm on his name after leaving the firm.
Winding up or dissolution of a firm is done at the will of the partners. A firm is dissolved by the mutual consent of the partners of the firm. Dissolution through court is made when one of the partners of the firm sue against others for dissolving the firm if any dispute arises. Any thing done in contravention of the contract between the partners can be brought up before the court. According to section 63 of the act recording the changes in relation to the dissolution of a firm shall be notified before the registrar. Partners of an unregistered firm have no right to file any suit before the court.
The partnership act 1932 envisages all the aspects right from the registration of a firm till it’s winding up.