GENERAL NATURE OF PARTNERSHIP

• THE INDIAN PARTNERSHIP ACT ,1932
  GENERAL NATURE OF PARTNERSHIP
  DEFINITION  ( SECTION 4)

1. PARTNERSHIP IS THE RELATION BETWEEN WHO HAVE AGREED TO SHARE THE  PROFITS OF THE BUSINESS CARRIED ON BY ALL OR ANY OF THEM ACTING FOR ALL.
2. PARTNERS ARE THOSE PERSONS WHO HAVE  ENTERED INTO PARTNERSHIP WITH ONE ANOTHER ARE CALLED INDIVIDUALLY PARTNERS AND COLLECTIVELY A FIRM

• ELEMENTS OF THE PARTNERSHIP

1. ASSOCIATION OF TWO OR MORE PERSONS:-MINOR  AND THE PERSONS WHO ARE NOT COMPETENT TO ENTER INTO CONTRACT CAN NOT BE PARTNERS. SILENT ABOUT THE  MAXIMUM NUMBER OF PARTNERS BUT SECTION 464 OF THE COMPANIES ACT 2013 HAS NOW PUT A LIMIT OF 50 PARTNERS IN ANY ASSOCIATION/PARTNERSHIP
2. AGREEMENT:- RESULT OF THE AGREEMENT. NATURE OF THE PARTNERSHIP IS VOLUNTARY AND CONTRACTUAL. THE AGREEMENT MAY BE EXPRESS OR IMPLIED. IT MIGHT BE WRITTEN OR ORAL
3. BUSINESS:-THERE MUST EXIST A BUSINESS AND THE MOTIVE OF THE BUSINESS IS THE ACQUISITION OF GAIN WHICH IS THE BASIS OF PARTNERSHIP
4. AGREEMENT TO SHARE PROFIT:-SHARING OF THE PROFIT IS ESSENTIAL CONDITION.
5. MUTUAL AGENCY:- THE BUSINESS OF PARTNERSHIP MAY BE CARRIED ON BY ALL PARTNERS OR ANY OF THEM ACTING FOR ALL. A PARTNER IS BOTH AN AGENT ( HE CAN BIND BY HIS ACTS THE OTHER PARTNERS) AND THE PRINCIPAL ( IN THE SENSE THAT HE CAN BE BOUND BY THE ACTS OF OTHER PARTNERS)

• LAW OF PARTNERSHIP AN EXTENSION OF THE LAW OF AGENCY

1. THE PARTNERSHIP BUSINESS MAY BE CARRIED ON BY ALL THE PARTNERS OR ANY OF THEM ACTING FOR ALL
2. RELATIONSHIP OF PRINCIPAL AND AGENT IS ESTABLISHED  AMONG PARTNERS IS GOVERNED BY THE LAW OF AGENCY.
3. SECTION 18 ALSO PROVIDE THAT PARTNER IS THE AGENT OF THE FIRM

• CASE COX V HICKMAN
• A TRADE CARRIED ON HIS BUSINESS UNDER THE SUPERVISION OF HIS CREDITORS. THE OBJECT OF CARRYING ON THE BUSINESS WAS TO PAY THEM OFF OUT OF THE PROFITS OF THE BUSINESS. NO PARTNERSHIP EXISTED BETWEEN THE TRADER AND CREDITOR
• A PARTNER ASSUMES A TWO FOLD CHARACTER:-

1. AGENT OF THE FIRM AND HE CAN BIND THE FIRM BY HIS ACT PROVIDED
2. THE ACTS WITH IN THE SCOPE OF AUTHORITY

a)    DONE IN THE FIRM’S NAME

b)    DONE FOR THE PURPOSE OF THE BUSINESS OF THE FIRM

·         II. HE IS A PRINCIPAL SO FAR OTHER PARTNERS ARE CONCERNED.

·         A,B AND C ARE PARTNERS IN A BUSINESS D,AN OUTSIDER DEALS WITH THE FIRM THROUGH A. AS BETWEEN A AND D, A IS THE PRINCIPAL, BUT AS BETWEEN A,B ,C AND A IS THE AGENT OF B AND C. AS SUCH AS A,B AND C CAN SUE D. D CAN ALSO SUE A,B AND C.

• TRUE TEST OF PARTNERSHIP
• MUST BE PROVED:-
• AN AGREEMENT BETWEEN ALL THE PERSON CONCERNED
• TO SHARE THE PROFITS OF THE BUSINESS
• THE BUSINESS WAS CARRIED ON BY ALL OR ANY OF THEM  ACTING FOR ALL

1. AGREEMENT:- PARTNERSHIP IS CREATED BY AGREEMENTS NOT BY STATUS ( SECTION 5). THE MEMBERS OF HUF OR A BURMESE BUSDDHIST HUSBAND AND  WIFE ARE NOT PARTNERS
2. SHARING OF THE PROFIT” SHARING OF PROFIT IS AN PRIMA FACIE EVIDENCE NOT CONCLUSIVE EVIDENCE
3. AGENCY : EXISTENCE OF MUTUAL AGENCY WHICH IS THE CARDINAL PRINCIPLE OF PARTNERSHIP LAW. EACH PARTNER CARRYING ON THE BUSINESS IS THE  PRINCIPAL AS WELL AS  AGENT OF OTHER PARTNERS

• SHARING OF PROFITS

• SHARING OF PROFIT IS AN PRIMA FACIE EVIDENCE NOT CONCLUSIVE EVIDENCE. MERE SHARING OF THE PROFIT WILL NOT MAKE THEM AUTOMATICALLY MAKE THEM PARTNERS.

1. JOINT OWNERS SHARING GROSS RETURN  ARISING FROM THE PROPERTY DO NOT BECOME PARTNERS
2. RECEIPT BY A PERSON OF A SHARE OF THE PROFITS OF  A BUSINESS OR OF A PAYMENT CONTINGENT UPON THE EARNING OF THE PROFIT OR VARYING WITH THE PROFIT EARNED BY THE BUSINESS DOES NOT MAKE PARTNER
3. WHERE A PERSON HAS LENT MONEY TO PERSON ENGAGED OR ABOUT TO ENGAGE IN THE BUSINESS AND RECIEVES A RATE OF INTEREST VARYING WITH THE PROFIT
4. WHERE THE SERVANT OR AGENT IS ENGAGED IN A BUSINESS AND RECEIVES HIS REMUNERATION AS SHARE OF PROFIT
5. WHERE THE WIDOW OR CHILD OF A DECEASED PARTNER RECEIVES A PORTION OF THE PROFITS
6. WHERE A PERSON HAS SOLD HIS BUSINESS ALONG WITH ITS GOODWILL AND RECEIVES A PORTION OF THE PROFIT IN CONSIDERATION OF THE SALE

• REAL TEST IS MUTUAL AGENCY
• AGENCY : EXISTENCE OF MUTUAL AGENCY WHICH IS THE CARDINAL PRINCIPLE OF PARTNERSHIP LAW. EACH PARTNER CARRYING ON THE BUSINESS IS THE  PRINCIPAL AS WELL AS  AGENT OF OTHER PARTNERS
• . EACH PARTNER CARRYING ON THE BUSINESS IS THE AGENT OF OTHER PARTNERS
• SANTIRAJAN DAS GUPTA VS DASYRAN MURZAMULL
• FOLLOWING FACTORS WEIGHED  AND CONCLUDED THAT NO PARTNERSHIP EXIST

1. PARTIES HAVE NOT RETAINED ANY RECORD OF TERMS AND CONDITIONS OF PARTNERSHIP
2. PARTNERS HAVE MAINTAINED NO ACCOUNTS OF ITS OWN
3. NO ACCOUNT OF THE PARTNERSHIP WAS OPENED WITH BANK
4. NO COMMUNICATION OF THE NEWLY CREATED PARTNERSHIP TO DEPUTY DIRECTOR WITH PROCUREMENT

• WHO ARE NOT PARTNERS
• SECTION 5
• THE FOLLOWING PERSONS ARE NOT PARTNERS

1. THE MEMBERS OF A HINDU UNDIVIDED FAMILY CARRYING ON FAMILY BUSINESS AS SUCH
2. A BURMESE BUDDIST HUSBAND AND WIFE CARRYING ON THE BUSINESS AS SUCH