Rights, Duties & Obligations of Partners

 The Rights and duties of partners with each other and with respect to the firm are divided into two categories-

i. Mandatory

ii. Subject to the agreement among partners

• The mandatory right & duties cannot be changed or contracted out by agreement between the partners. Following are the mandatory duties & reciprocal rights of a partner:

1. To carry on the greatest common advantages (S.9)

2. To be just & faithful (S.9)

3. To render true accounts and full information (S.9)

4. To indemnify (S.10)

5. Right to take part in the conduct of business [S.12(a)]

6. Right to express opinion [S.12(c)]

7. Right to have access to books of the firm. [S.12(d)]

8. Right to share profits [S.13(b)]

9. Right to interest on capital and advances [S.13(c) & (d)]

10. Right to indemnity [S.13(e)]

• Duties of Partners-

1. .Duty to carry on the business to the greatest common advantage [S.9]
2. .Duty to be just and faithful to each other [S.9]
3. Duty to render true accounts [S.9]
4. Duty to render full information of all things affecting the firm [S.9]
5. Duty to indemnify for fraud [S.10]
6. Duty to be diligent [S.12(b) & S.13(f)]
7. Duty to properly use the firm’s property [S.14 & S.15]
8. Duty not to earn personal profits or to compete [S.16]

• Liability of a Partner with regards to third party-

1. Liability for the acts done within the authority of a partner (S.18-22)
2. Liability when a partner acts in emergency (S.21)
3.  Liability on ratification of a partners act
4. Liability for admission made by a partner (S.23)
5. Liability on notice to an acting partner (S.24)
6.  Liability for torts & wrongful acts (S.26)
7. Liability for misapplication of money or property (S.27)

Test to determine the scope of implied authority

1. The act should be done in relation to the partnership business and,

2. The act should be done in usual way, in relation to the business of the kind carried on by the firm.

3. Nature of the business is thus a relevant factor

Law of agency –notice to agent = notice to principal

• If a fraud has been committed on the firm by or with the consent of a particular partner, notice to such a partner regarding that matter is not deemed to be a notice to the firm.

• A principal is vicariously liable for the torts & wrongful acts committed by his agent, since every partner is the agent of the firm, same principal is applicable & recognised by the Indian Partnership Act.

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