1. Mutual Rights and Duties of Partners
In the absence of a specific partnership agreement between the partners, the following provisions relating to rights and duties of partners are found in Section 26 of the Partnership Act 1961.
(a) Every partner is entitled to equal share of capital and profits of the business, and must contribute equally to losses.
(b) Every partner who made any payment and incurred personal liabilities in the course of the firm's business is entitled to be indemnified by the firm.
c) Every partner who made any advance for the purpose of the firm's business, beyond the capital amount he subscribed is entitled to 8% interest per annum from the date of the payment of the advance.
(d) No partner is entitled to interest on capital before the ascertainment of profits.
(e) Every partner may participate in the management of the firm.
(f) No partner is entitled to remuneration for acting in the partnership business.
Reason being is the existence of the fiduciary relationship between partners. Thus, any partner who is assigned to manage the business is duty bound to exercise such duty for the interest of the partnership. The partners are not entitled to any salary or wages because they are performing their duties as partners in the course of the partnership business.
(g) No partner may introduce another (new) partner without the consent of other existing partners.
(h) The majority partners may decide any differences as to ordinary matters connected with the firm's business but the changes in the nature of the firm's business must be made with consent of all the existing partners.
(i) The partnership books are to be kept at the place of partnership business, or at the principal place if there is more than one place of business.
It is important to note that Section 26 of the Partnership Act 1961 is only applicable in the absence of the partnership agreement between the partners. In the existence of the partnership agreement, the above provisions are not applicable.
2. Obligations of Partners to Act in Utmost Good Faith
Every partner must act honestly because the relationship between partners is based on the principle of uberrimae fidei (utmost good faith). Further obligations of partners in a firm are provided in the following provisions; Section 30, 31 and 32 of the Partnership Act 1961.
(a) Under Section 30, every partner is obliged to render true accounts and full information on all things affecting the partnership.
(b) According to Section 31, every partner who uses the partnership property, name or business connection, or involve in any transaction concerning the partnership, without the consent of other partners, must account to the firm for any secret profit or benefit derived by him.
(c) Section 32 provides the obligation of a partner not to compete with the firm in business of the same nature without consent of the other partners. Thus, if a partner opens a competing business without the consent of other partners, he must account for and render all profits made by him to the firm.
In the absence of a specific partnership agreement between the partners, the following provisions relating to rights and duties of partners are found in Section 26 of the Partnership Act 1961.
(a) Every partner is entitled to equal share of capital and profits of the business, and must contribute equally to losses.
(b) Every partner who made any payment and incurred personal liabilities in the course of the firm's business is entitled to be indemnified by the firm.
c) Every partner who made any advance for the purpose of the firm's business, beyond the capital amount he subscribed is entitled to 8% interest per annum from the date of the payment of the advance.
(d) No partner is entitled to interest on capital before the ascertainment of profits.
(e) Every partner may participate in the management of the firm.
(f) No partner is entitled to remuneration for acting in the partnership business.
Reason being is the existence of the fiduciary relationship between partners. Thus, any partner who is assigned to manage the business is duty bound to exercise such duty for the interest of the partnership. The partners are not entitled to any salary or wages because they are performing their duties as partners in the course of the partnership business.
(g) No partner may introduce another (new) partner without the consent of other existing partners.
(h) The majority partners may decide any differences as to ordinary matters connected with the firm's business but the changes in the nature of the firm's business must be made with consent of all the existing partners.
(i) The partnership books are to be kept at the place of partnership business, or at the principal place if there is more than one place of business.
It is important to note that Section 26 of the Partnership Act 1961 is only applicable in the absence of the partnership agreement between the partners. In the existence of the partnership agreement, the above provisions are not applicable.
2. Obligations of Partners to Act in Utmost Good Faith
Every partner must act honestly because the relationship between partners is based on the principle of uberrimae fidei (utmost good faith). Further obligations of partners in a firm are provided in the following provisions; Section 30, 31 and 32 of the Partnership Act 1961.
(a) Under Section 30, every partner is obliged to render true accounts and full information on all things affecting the partnership.
(b) According to Section 31, every partner who uses the partnership property, name or business connection, or involve in any transaction concerning the partnership, without the consent of other partners, must account to the firm for any secret profit or benefit derived by him.
(c) Section 32 provides the obligation of a partner not to compete with the firm in business of the same nature without consent of the other partners. Thus, if a partner opens a competing business without the consent of other partners, he must account for and render all profits made by him to the firm.
No comments:
Post a Comment