Business Law Presentation Partnership chp no 32

Partnership chapter no 32 Presentation slides

1. Business Law
Chapter No : 32
PARTNERSHIP

2. Content
01
02
03
04
05
06
07
Definition and Its Characteristics
Minor Partner and Difference B/W
Partnership and Co-ownersship
Partnership Deed
Partnership Rights and Duties
Implied Incoming and outgoing
Partner
Dissolution of firms
Consequences of Dissolution

3. PARTNERSHIP
Definition
it is a relation between two person who have agreed to share the profit of business
carries on by all or any one of them .A partnership is voluntary association of two or
more persons who contribute capital and skill to run business for profits and share
loss.

Partner : the person who enter in partnership individually.
Firms : the person who enter into partnership are collectively
called a firm.

4. Partnership has no separate legal
entity apart from its members it . The
partnership and partner are not
separate from each other . The rights
and liabilities of partnership and
partners are same ,if partners dies
,retries or become insane the
partnership ends
CHARACTERISTICS
AgreementLegal entity
A partnership results from an agreement
between two or more persons it may be
oral or written the persons whoa are
competent to contract can form a
partnership .
Example Father son or third party
If father died who is partner in firm the son
can claim a share in firms assessts but
cannot become a partner unless he enter
into agreement with other partner.

5. At least 2 persons are requires to foam
partnership . It does not mention any
maximum limits of partners in a
partnership.
According to companies act 2017 a
partnership consisting of more than 20
persons cannot be formed a partnership
of more than 20 person can be formed to
carry on practice as lawyers , accountant
, and other professions In case o joint
families member may be more than 20
CHARACTERISTICS
Purpose of partnership
Number of partners
In order to foam a partnership the partners
must agree to run a certain business .if
purpose of partnership is to carry on
something other than business it cannot
be called a partnership

6. The business may e run by all partners or
any of them acting on behalf of all
partners each partner acts as agent of
other partners .each partner acts as a
principle because he binds himself to the
activities of other partners.it means a
contract of agency exists among partners
CHARACTERISTICS
Unlimited liability
Mutual agency
The liability of partners is unlimited .all
partners are individually and collectively
responsible for firm debts if firm assets
are insufficient to pay the debts the private
assets of partners can e sold to pay the
firms partners

7. The share in a partnership is not freely
transferable usually the partnership deed
include provision for transfer of ownership
of partners .if there are no provision in
partnership deed a partner cannot
transfer his ownership to outside person
without consent of all other partner
CHARACTERISTICS
Duration
Transfer of ownership
A partnership continues as long as
partners are willing to run the business .it
come to an end insanity or insolvency of
any of the partners .if remaining partners
agree to continue the business and make a
new agreement the firm will not dissolve.

8. Presented by: Zoha Rouf (211350060)
MINOR PARTNER AND DIFFERENCE
B/W PARTNERSHIP AND CO-
OWNERSSHIP

9. Types of Partner
1. Partnership-at-Will
When no provision is made in the agreement regarding the duration of the partnership, it is called a partnership at will. Any
partner can terminate the partnership any time by giving a notice of termination. When such a notice is given, the partnership
is dissolved from the date mentioned in the notice. If no date is mentioned in the notice, the partnership terminates from the
date when notice is communicated.
2. Particular Partnership
When a partnership is formed to do a particular business or undertaking; it is called a particular partnership. Such a partnership is
dissolved immediately on completion of the particular business, e.g. making a film. If the partnership continues after completing
the business for which it was formed, it becomes a partnership-at-will.

10. Minor Partner
Minor is a person who has not completed 18 years of
age. A person who wants to enter into a partnership
must be competent to contract. A minor is not
competent to contract, so he cannot become a
partner. However, a minor may be admitted to the
benefits of a partnership with the consent of all
partners by an agreement with his guardian. The
following points are important in this regard

11. 1. Position during Minority
The rights and liabilities of a minor during minority are as follows:
• He has the right to receive his agreed share in the property and profits of the firm.
• He can inspect and take copies of accounts but not the books of the firm as they
may contain business secrets.
• He is not personally liable for debts. His liability is limited to his share in the firm.
• He cannot take part in the management of the business.
• He has the right to sue other partners for his share in the property or profit of the
firm when he breaks his relation with the firm.
• He cannot be declared insolvent

12. 2. Position after Majority
A minor must decide whether he will become a partner or not within 6 months of
attaining majority or on knowing that he was admitted to the benefits of
partnership, whichever date is later. He must give public notice of his decision. If
he does not give public notice, he shall be considered a partner of the firm.
3. Decision to Become Partner
If a minor decides to become a partner, his position will be as follows:
• His rights and liabilities will be similar to those of a partner.
• He becomes personally liable to third parties for debts and obligations of the
firm from the date of his admission to the benefits of the partnership.
• His share in profits and property in the firm remains the same unless changed by
agreement.

13. 4. Decision not to become Partner
If a minor decides not to become a partner, his position will be as follows.
• His rights and liabilities continue to be those of a minor up to the date of his public notice.
• He is not liable for acts of the firm done after the date of his public notice.
• He can sue partners for his share in the property and profits of the firm.

14. DIFFERENCE BETWEEN PARTNERSHIP
AND CO-OWNERSHIP
Co-ownership means joint ownership of some property. Two or more persons who own some
property jointly are called co-owners. If co-owners of some property share profits arising from
the property, they do not become partners. The differences between the two are as follows:

15. PARTNERSHIP
CO-OWNERSHIP
1. Agreement
It is a result of an agreement.
It is not necessarily the result of an agreement. It
may arise by operation of law.
2. Agency
A partner is an agent of the firm. He can bind other
partners for his acts.
A co-owner is not an agent of the business. He
cannot bind the co-owners for his acts.
3. Transfer of Share
A partner cannot transfer his share without the
consent of all the partners.
 

A co-owner can transfer his interest without the
consent of co-owners.

16. PARTNERSHIP
CO-OWNERSHIP
4. Common Interest
There is a common interest. There is no common interest
5. Number of members
The maximum limit of partners is 20. In some cases the
number of partners may be more than 20.
There is no maximum limit of CO-OWNERSHIP
6. Status of Member
Persons who form partnership are called
partners.
 

Persons who co-own joint property are called co-
owners.

17. PARTNERSHIP CO-OWNERSHIP
7. Business
It is always formed to carry on a business.
It may or may not be formed to carry on a
business.
8. Division of property
A partner cannot sue for division of the property.
co-owner can sue for division of property.
9. Sharing profit
Sharing of profits and losses is necessary.
Sharing of profits and losses may or may not be
necessary.

18. PARTNERSHIP DEED
PRESENTED BY: SHAHZAD JAMIL (211350009)

19. There must be an agreement among the partners to form a
partnership. The agreement may be oral or written. The
following must be considered before entering into an
agreement of partnership:
1. The partners of a firm must be selected with care.
2. The object of the firm must be lawful.
3. The rights and duties of partners must be explained in detail.
4. The registration of partnership is not compulsory. But it is better to have
it registered.
FORMATION OF PARTNERSHIP

20. The partnership agreement in writing is called partnership
deed. It generally contains the following provisions:
1. The name of the firm.
2. The names and addresses of all partners
3. The nature of business of the firm.
14. The town and place where the business will be carried on.
5. The amount of capital invested by each partner.
6. The duration of the partnership.
7. The ratio of sharing profits and losses(Losses Except Of Minor).
8. The rate of interest, if any, allowed on capital.
9. The rate of interest on loans given by partners to firm.
10. The rate of interest to be charged on drawings.
PARTNERSHIP DEED

21. 11. The amount a partner can withdraw from the firm.
12. The amount of salary or commission payable to any partner for his services.
13. The circumstances under which a firm shall dissolve.
14. The rights, duties and liabilities of partners.
15. The method of valuation of goodwill.
16. The period of accounting year.
17. The rules regarding retirement, death and admission of a partner.
18. The methods of solving disputes among the partners and appointment of arbitrator.
19. Power of a partner to retire after giving notice.
20. The rules to determine amount to be paid to the deceased partner and manner of
payment.
21. The rules of expulsion of partner from firm.
22. The keeping of proper books of accounts and preparation of accounts.
PARTNERSHIP DEED(CON..)

22. The name under which partners carry out their business is called the firm's name. The
partners can choose any name for the firm according to the following rules: [Sec. 58]
1. Name must not be identical or similar to the name of an existing firm.
2. Name must not contain the words Government, Jinnah, Quaid-e-Azam or words
showing the approval or patronage of the Federal Government or any Provincial Government,
without consent of the provincial government.
3. Name must not contain the name of United Nations (UN) or abbreviations of its subsidiary
body without sanction of the Secretary General of UN.
4. Name must not contain the name of the World Health Organization (WHO) or its
abbreviations without sanction of the Director General of WHO.
5. Name must not contain any word which may be declared by the Provincial Government as
undesirable.
FIRM'S NAME

23. REGISTRATION OF FIRM
According to Partnership Act, the registration of partnership is not compulsory. If the partners so
desire, they may get their firm registered. The procedure of registration is as follows:
1.Submission of Application
An application in the prescribed form with the prescribed fee is submitted to the Registrar of firms. The
application must be signed by all the partners. The application must contain the following particulars:
[Sec. 58]
1.The name of the firm.
2.The place or principal place of the firm.
3.The names of other places where the firm carries on business.
4. The names and addresses of the partners
5.The partner's date of joining the firm.
6.The duration of the firm, if any.

24. 2. Certification
The Registrar examines the application and if he is satisfied with the application, he registers the firm
and enters its name in the Register of firms. He issues a certificate of registration. [Sec. 59]273
3. Change of Particulars
If any change takes place in any of the particulars given above, the Registrar must he informed. He will
include the necessary changes in the Register of firms. [Sec. 60-63]
4. False Information
A person who provides false information to the Registrar shall be punishable with imprisonment, which
may extend to three months, or with fine, or with both. [Sec. 70]
REGISTRATION OF FIRM
(CONT...)

25. 1. Suit by Partner
A partner of an unregistered firm cannot file a suit against the firm or any partner of the
firm to enforce any right arising from the contract. However, one partner can sue other
partners for criminal act. Thus, if a partner steals the property of the firm any partner can
file a suit.
2. Suit by Firm
An unregistered firm cannot file a suit against a third party for enforcement of any right
arising from a contract e.g. recovery of price of goods supplied. But a suit can be filed for
criminal acts against any responsible person.

EFFECTS OF NON-REGISTRATION

26. 3. Suit by Firm against Partner
The firm cannot sue any partner of the firm for the enforcement of any right arising from a
contract.
4. Suit by Third Party
A third party can file a suit against the firm or its partner to enforce its rights e.g. a supplier can
file a suit against the firm for the recovery of price of thegoods delivered to the firm.
5. Claim for Adjustment
A firm cannot claim adjustment of the amount exceeding Rs. 100 payable and receivable by
the firm e.g. a firm has to pay Rs. 500 to X who owes Rs. 800 to the firm; firm cannot claim
adjustment and enforce in the court.
EFFECTS OF NON-
REGISTRATION(CONT...)

27. However, non-registration of a firm does not affect the following: [Sec. 69]
1. The third party can sue the firm for his rights.
2. The partners can sue for the dissolution of the firm.
3. The partners can sue for the accounts of a dissolved firm.
4. The partners can sue for the realization of the property of a dissolved firm
5. The dissolved firm can sue to recover damages for breach of contract
6. Firm and its partners can sue third party for adjustment of claim up to Rs. 100
7. The receiver can sue to realize the property of an insolvent partner.
8. The partners can refer a dispute to arbitrator
9. A partner can sue another partner for damages due to misconduct.
10. The firm may sue the third party to restrain from using patent right
EXCEPTIONS

28. Presentation by: Sabeen Asif
Partnership Rights
and Duties

29. Partnership
Rights
Management of business
Expression of opinion
Inspection of books
Sharing to profits
Interest on Capital
RIGHTS
AND
DUTIES
OF
PATNER-
SHIPS

30. Management of Business
Every partner can take part in the conduct of the business. However, every partner is
not bound to participate in the conduct of the business, but the right to participate is
available to each partner.
Expression of opinion
Every partner has a right to express his opinion before any business matter is decide.
The ordinary matters of businessmay be decided by the majority of partners.
Inspection of Books
Every partner has a right to inspect and take copies of the books of the firm. However,
a minor partner can inspect the account but not the books of the firm.
Sharing to Profits
Every partner has a right to an equal share in profits. He is liable to contribute equally
to losses suffered by the firm.
Partnership Rights

31. Interest on Capital
Every partner can take interest on capital contributed by him. The interest shall be paid
from the profits only.
Interest on Advances
Where a partner gives any advance for the business more than the amount of his capital, he
can get an interest there on at the rate of 6% per annum.
Indemnity
Every partner has a right to be indemnified by the firm in respect of payments made and
liabilities incurred by him in theordinary and proper conduct of the business of the firm.
Action in Emergency
A partner has a right to act in an emergency to protect the firm from loss. He can bind the
firm by any act done in an emergency Provided he acts as a reasonable person.
Partnership Rights

32. Consent to new partner
Every partner has a right to prevent the introduction of a new partner without his consent.
Retirement
A partner has a right to retire with the consent of all partners or according to the
agreement or where the partnershipIs at will, by giving a notice to all partners.
Expulsion of Partner
A partner cannot be expelled from a firm by any majority of partners provided the decision
is made in good faith and there is a provision in the contract.
Partnership Rights

33. Partnership
DUTIES
Carry on Business
Just and Faithful
§ender Accounts
Provide
Information
Indemnity
RIGHTS
AND
DUTIES
OF
PATNER-
SHIPS

34. Carry on Business
Every partner is bound to carry on the business of the firm for common advantage. He must
use his knowledge and skill for benefits of the firm and not for his personal gain.
Just and Faithful
Every partner should be just and faithful to other partners of the firm.
Render Accounts
Every partner must render true and proper accounts to his co-partners. Each partner must
be ready to explain the accounts of the firm and produce vouchers in support of entries.
Provide Information
Every partner must give full information about the firm to his co-partners. A partner must
not conceal any information from other partners.
Partnership DUTIES

35. Indemnity
Every partner is bound to indemnity the firm for any loss caused by his fraud in the conduct
of the business of the firm. But where the partner acts in good faith, the loss caused is borne
by the firm.
Attend Diligently
Every partner must attend diligently to his duty in the conduct of the business of the firm.
He must use his knowledge and skill to the common advantage of all partners.
Share Losses
Every partner shall bear the loss of the firm equally irrespective of his capital contribution.
Indemnity for Willful Neglect
Every partner shall indemnity the firm for any loss caused by his willful neglect in the
conduct of the business of the firm.
Use of Property
Every partner must hold and use the property of the firm only for purposes of the business
Partnership DUTIES

36. Account for Personal Profits
If a partner gets any personal profit from the firm business, he must account for that profit
and pay it to the firm.
Account for Profit
A partner must not carry on any business similar to that of the firm. If he does so, he shall
pay all profits earned from that Business to the firm.
Individually and Jointly Liable
Every partner is liable, individually and jointly, for all acts of the firm done while he is a
partner.
Transfer of Rights
A partner cannot transfer his rights and interest in the firm to an outsider to make him a
Partner without the consent of his Co-partners.
Partnership DUTIES

37. IMPLIED INCOMING AND
OUTGOING PARTNER
PRESENTATION BY: RABIA BASHIR
22101400003

38. Liability of Partners
1.Liability of Partner for Acts of Firm:
Every partner is individually and jointly liable to third parties for all acts of the firm. It means that
if assets of the firm are not sufficient to meet the claims of third parties, the partner have to pay
the remaining claims out of their personal property. [Sec-25]
2.Liability of Firm for Wrongful Act:
The firm is liable for any loss or injury caused to third parties for wrongful acts of a partner in
ordinary course of the business of the firm. [Sec-26]
3.Liability of Firm for Misapplication:
If any partner or Firm receives money or any other property from a third person in normal course
of business and the same is misapplied, the firm will be liable to make good the loss.[Sec-27]

39. Implied Authority of Partner
The act of partner binds the firm in the following cases: [Sec-18, 19]
The partner must perform the act in relation to the partnership business
The partner must perform the act in usual way in relation to the business carried on by the firm.
No Implied Authority of Partner:
A partner cannot perform the following acts under implied authority unless there is usage or
custom of trade: [Sec-19(2)]
To submit a dispute relating to the business of the firm for arbitration.
To open a bank account on behalf of the firm in his own name.
To settle claims of the firm.
To withdraw any suit filed by the firm.
To admit any liability in a suit against the firm.
To buy any immovable property of the firm.
To transfer immovable property of the firm.
To make an agreement with others on behalf of the firm.

40. Incoming and outgoing Partner
The rules are as follows: [Sec. 31-34]
1. Introduction of Partner:
A new person can be admitted into the partnership at any time with consent of all
existing partners or in accordance with the contract between the parties. The
person who is admitted is called an incoming partner. An incoming partner is not
liable for any act of the firm done prior to his admission as partner.
2.Retirement of Partner:
A partner may leave a firm with the consent of all partners or in accordance with
the agreement. Where partnership is at will, a partner may leave by giving a notice
in writing to all other partners. A partner who retires from the firm is called a
retiring or outgoing partner.
A retired partner is liable to third party for all acts of the firm before the date of his
retirement unless he is discharged from liability. A retired partner continues to be
liable to third party for any act done by him after retirement until a public notice is
given of his retirement.

41. Incoming and outgoing Partner
3. Expulsion of Partner:
A partner may be expelled from a firm by majority of the partners. The majority of
the partners can expel a partner in good faith under the powers of the contract.
The expelled partner remains liable to third party until he gives notice of his
retirement.
4. Insolvency of Partner:
Where a partner becomes insolvent, he ceases to be a partner. Where under a
contract between the partners, the firm is not dissolved by insolvency of a partner,
the insolvent partner is not liable for any act of the firm and the firm is not liable
for any act of the insolvent partner.
5. Death of Partner:
On death of a partner, a firm may dissolve. However, other partners may agree to
continue the firm. The assets of a deceased partner are not liable for any act of the
firm done after his death. His assets are liable only for liabilities undertaken during
his lifetime.

42. DISSOLUTION OF FIRM!
PRESENTATION BY: MUSKAN
SHAHID (222350011)
Start Slide

43. Dissolution of firm
The term dissolution means discontinuation.
The dissolution may be either of a
partnership or of a firm. When one partner
dies, retires or become insolvent but
remaining partners continue their business, it
is called dissolution of partnership.
When relationship between all parties comes
to an end and the business is closed, it is
called dissolution of firm.
BUSINESS LAW

44. Grounds of Dissolution
BUSINESS LAW
1.Dissolution By Agreement
2.Compulsary Dissolution
3.Contingent Dissolution
4.Dissolution By Notice
5.Dissolution By Court

45. 1. Dissolution By Agreement:
A firm may be dissolved with consent of all the parties or in accordance with a
contract between the partners.
2. Compulsary Dissolution:
A compulsary dissolution takes place under following circumstances:
When all the parties are declared insolvent.
When all except one of the partners are declared insolvent.
When business of the firm becomes unlawful.

46. 3. CONTINGENT DISSOLUTION:
Subject to contract between the partners a firm
may or may not dissolve under the following
circumstances:
On expiry of fixed period for which the firm
was formed.
On completion of the project for which the
firm was formed.
On death of the partner
On insolvency of any partner.

47. 4. DISSOLUTION BY NOTICE:
When the partnership is at will, the firm may be
dissolved by any partner by giving notice in
writing to all other partners of his intention to
dissolve the firm. The firm is dissolved from the
date mentioned in the notice. If no date is
mentioned, it dissolves from the date of
communication of the notice.

48. 5. DISSOLUTION BY COURT:
a.Insanity:
b.Permanent Incapacity
c.Misconduct
d.Breach of agreement
e.Transfer of Interest
f.Continuous Losses
g.Just and Equitable
The court decides about the dissolution
of firm if there is a dispute among the
partners regarding dissolution. The court
may dissolve a firm on any of the following
grounds on a suit filed by any of the
partners:

49. a. Insanity:
When a partner becomes insane, the court may allow disssolution of the firm.
However, temporary sickness is no grounds for dissolution of firm.
b. Permanent Incapacity:
When a partner becomes permanently incapable of performing his duties, the
court may order dissolution of firm
c. Misconduct:
When a partner is guilty of misconduct which adversely affects the reputation of
the firm, the court may dissolve the firm.

50. D. BREACH
OF
AGREEMENT:
When a partner commits
breach of agreement
relating to ,anagement of
the affairs of the firm, the
court may dissolve the
firm.
E.
TRANSFER
OF
INTEREST:
When business of a firm
cannot be carried on
except of a loss, the court
may order for dissolution of
firm.
F.
CONTINU
OUS
LOSSES:
G. JUST
AND
EQUITABLE:
When a partner transfers
whole of his interest in the
firm of a third party
without consent of other
partners, the court may
dissolve the firm.
When on any other
ground, the court
considers it just and
equitable that the firm
should be dissolved, the
court may dissolve the
firm.

51. THANK YOU
Have any question?