Tag: dissolution of firm

According to Section 44 of the Indian Partnership Act, Insanity of a partner and Misconduct by partner can be cause of dissolution of firm by court. If a partner has transferred his interest to third parties, other partners may apply to the firm to dissolve the firm. But ill health of a partner can not be the cause of dissolution of a firm because ill health is temporary. 

Section 72 lays down the manner and the cases in which the public notice of certain matter relating to partnership firm is to be given. if no public notice is given then the partners continue to be liable to third parties in case of dissolution, retirement and expulsion. Minor partner within six months of attaining eighteen years of age choose to become or not to become partner and specify the same by way of public notice. If no public notice is given then minor deemed to have become a partner of the firm. 

1. When a partner in a firm is adjudicated an insolvent he ceases to be a partner on the date on which the order of adjudication is made, whether or not the firm is dissolved. 
   2. Where under a contract between the partners the firm is not dissolved by the adjudication of a partner as an insolvent, the estate of a partner so adjudicated is not liable for any act of the firm and the firm is not liable for any act of the insolvent, done after the date on which the order of adjudication is made. 

Partners can determine their mutual rights and duties by an agreement called partnership deed. Partnership Deed is an important part of partnership. It clearly states the duties of partners. Any change in duties such as duty to work without remuneration, duty to contribute to losses, duty to indemnify for losses caused due to willful negligence can be made by making changes in partnership deed.

Registration of partnership firm is not compulsory but partners prefer to get it registered. Because if a partnership firm is not registered it can not file a suit against any third party. No partner can file a suit against any other partner. The firm can not file a suit against any partner. But third party can file a suit against firm. 

Dormant partner is a partner who takes no share in the active business of partnership but share profits or losses.  Permanent incapacity of a dormant partner does not have much effect on partnership because dormant partner does not manage its working. But permanent incapacity of active partner or managing partner may stop the working of business. So the court may not order for dissolution on permanent incapacity of a dormant partner. 

Guarantee given to a partner means partner will be given a fixed minimum amount of profit. and if any deficiency arise will be met by the other partner.  So in this A is given guarantee of minimum amount and if there is  loss or insufficient profit then B and C will pay the amount remaining short.

A partner by holding out means a person who is not a member of firm but allows himself/herself to be represented as a partner. Such person is responsible to person who has given loan to firm on his representation because loan has been given by assuming that he/she is member.

Registration of partnership is not compulsory under law. But if a partnership firm is not registered, it can not file a suit against the third party. No partner can file a suit against any other partner. The firm can not file a suit against any partner. But third party can file a suit against the firm.

All these are features of partnership. To form a partnership minimum two persons are required. A single person can not form partnership. Partnership is made to share profits and losses in the ratio mentioned in partnership deed. In partnership business is carried by all or any one of them can work for all.