Sociology | Mercantile Law | International Law | International Relations

Beyond ‘conduct of business’ there are other rights and liabilities which the partners of a firm face;

Sharing Gain & Loss
The partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm.

Indemnification of Partner
The firm shall indemnify a partner in respect of payments made and liabilities incurred by him.

CASE REFERENCE: Kadar Bux v. Buki Bihari (1932)
A & B are the partners who share profit and loss equally. They start partnership with X & Y without agreeing upon the future sharing-ratio. The conflict arose when X & Y allege that A & B are entitled to the 1/3rd share contrary to their claim of having right over 1/4th share of profit. Thus, keeping in view equal share in loss and profit it was held that, if A & B have joined as a firm then they have right over 1/3rd of the profit but if they have joined individually, they are entitles to 14th of the total profit.

Rights in Conduct of Business

• Every partner has a right to take part in the conduct of the business;
• Every partner is bound to attend diligently to his duties in the conduct of the business;
• Any difference arising as to ordinary matters connected with the business may be decided by a majority of the partners, and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in the nature of the business without the consent of all the partners; and
• Every partner has a right to have access and to inspect and copy any of the books of the firm