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Rights and Duties of Partners in Partnership firm



Partnership is a relation between two or more persons who have agreed to share the profit/loss of a business run by one or more persons acting for all. The persons who have entered into the partnership are individually known as “Partners”.

The Partners, in the partnership, enter into a partnership deed which generally defines all the rights and duties of partners. Subject to the partnership deed entered between the partners under provisions of Indian Partnership Act, 1932 also defines certain general rights and duties of partners.

Rights of Partners

Partners can exercise the following rights under the Act unless the Partnership Deed states otherwise

Right to take part in the conduct of the business:

Each partner has an equal right to take part in the conduct of the business. Partners can curtail this right to allow only some of them to contribute to the functioning of the business if the partnership deed states so.

  • Right to express opinions:

In case there arises any difference in the ordinary matters connected with the business, such dispensary can be resolved by the majority of the partners.

Each partner can express his opinion to decide such matters. It is mandatory to get the consent of all the partners to make any change in the nature of the business.

  • Right to share profits:

One of the basic right of partners is to share the profit as well loss (if mentioned in the deed). Sometimes, profit/loss sharing ratio is not defined in the partnership deed. In such case, the partners can share equal profits and contribute equally to the sustained losses.

  • Right to access books and accounts:

Each partner can inspect and copy books of accounts of the business. This right is applicable equally to active and dormant partners. Each partner has the right to get involved in accounting and bookkeeping as well.

In case of death of any partner, right to access, inspect and to obtain the copy of books of accounts would be available to the legal heirs or legal representative or duly authorized agent of the deceased partner.

  • Right to Interest on capital:

Usually partners don’t have any right to earn interest on the capital contributed by them. However, in case they decide to avail the interest benefit, then such payment must be made only out of profits i.e. in case of loss, interest to partners in not possible.

  • Right to Interest on advances:

If a partner makes an advances to the partnership firm in addition to the amount of capital to be contributed by him, the partner is entitled to claim interest thereon at 6% per annum.

  • Right to be indemnified:

The partners have the right to be indemnified for all the acts done by him/her in the course of the business and for all the expenses made by him/her in case of emergency for protecting the interest of the firm.

Duties of Partners

Let us see the duties under the Act has been prescribed:

General duties:

Partners are legally bound to carry on the business of the partnership firm. Every partner has the following general duties like carrying on the business to the greatest common good, duty to be just and faithful towards each other, rendering true accounts, and providing full information of all things affecting the firm etc.

  • Duty to indemnify for fraud:

Every partner has to indemnify the firm for losses caused to it by his fraud in the conduct of business. Any partner who commits fraud must indemnify other partners for his actions.

  • Duty to act diligently:

According to Indian Partnership Act, every partner is legally bound to attend to his duties towards the firm as diligently relating to the conduct of the firm’s business.

  • Duty to use the firm’s property properly:

Partners can use the firm’s property exclusively for its business, and not for any personal purpose because they all own it collectively. Hence they must be careful while using these properties.

  • Duty to not earn personal profits or to compete: 

Partners should not make any personal profit and must not engage in any competing business venture. They should handover personal profits made to their firm.

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