Indian Partnership Act 1932 by Anju Esther Balakrishnan at LEXCLIQ.

The Partnership Act of 1932 governs partnerships that are formed as a consequence of a contract. In cases where the Partnership Act is silent, the partnership is governed by the general provisions of the Indian Contract Act. It is specifically stated that any provision of the India Contract Act that has not been repealed shall apply to Partnerships until and until such provision is in conflict with any provision of the Partnership Act, 1932.

Kinds of partnership

The various forms of partnerships are differentiated by two characteristics.

In terms of the duration of the partnership’s term:

  1. Partnership at will: When there is no set time limit for the partnership to end, it is referred to as a partnership at will. Section 7 stipulates that two requirements must be met that is that there was no consensus on how to determine the partnership’s set time and there is no clause regarding the determination of partnership.
  2. Partnership for a fixed period: When the partners agree on the duration of the partnership, the relationship comes to an end when the agreed-upon term expires. When the partners elect to continue the partnership after the specified period has expired, it is referred to as a partnership at will.

A partnership’s size is determined by the scope of its operations:

  1.  Particular Partnership: When a partnership is formed in order to complete a project or task. When a project or activity is done, the partnership comes to an end. The partners can choose whether or not to stay with the business.
  2. General Partnership: When a partnership is formed for the sole purpose of conducting business. There are no specific tasks that must be accomplished. It is general in nature.

Scope of Partnership

The scope of the partnership is discussed in Section 7. The partnership is formed as a result of the contract, not because of the status. The partnership’s intention is a matter of the partnership. The partners may exercise any of their powers at any moment, but they must not do so in order to engage in unlawful, fraudulent, or unethical behavior. If one of the partners makes a contract without the permission of the other partners, the contract’s legitimacy is called into doubt. If all of the parties have approved or ratified the contract, there is no reason to doubt its legality. The partnership can join another business with the approval of all of the partners.

A partnership’s members are referred to as partners. It is not required that all partners are the same, or all partners engage equally in the management of the firm, or that all partners share equally in the profits and losses. The partners are categorized based on the type of their job, the amount of their culpability, and other factors. There are six different sorts of partners:

  1. Active/managing partner: A partner who actively participates in the day-to-day operations of the company. This type of partner is often referred to as an apparent partner.
  2. Sleeping/Dormant: He is not involved in the day-to-day operations of the company, but he is obligated by the actions of all partners.
  3. Nominal partner: They are merely a nominal partner in the business. In truth, he has no real or meaningful stake in the company.
  4. Partner in profit only: A profit-only partner is one who agrees to share profits but not losses. In the event that he deals with a third party, he is not accountable for any obligations.
  5. Minor partner: According to the Indian Contract Act, a minor cannot be a partner, although he might be permitted to receive the benefit of all partners who consent. His profit will be shared equally, but his responsibility will be restricted in the event of the firm’s loss.
  6. Partner by estoppel: It means that if a person is not a partner but has represented himself as such to another person via action or words, he cannot afterward deny. Even if he is not a partner, by holding out or by estoppel, he becomes one.


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