RIGHTS AND DUTIES OF A PARTNER by ANJU ESTHER BALAKRISHNAN at LEXCLIQ.

Rights of the Partners

Right to participate in the management of the company

Section 12(a) of the Act states that each partner has the right to participate in the management of the company. When certain partners solely participate in the firm’s business concerns, their right to participate in business is limited. This privilege can only be limited if the partnership agreement expressly specifies so.

Access to and inspection of books and accounts

Section 12(d) mentions that both the active and inactive partners have this right. Each partner has the opportunity to view and review the firm’s accounting records. In the event of a partner’s death, his legal heir has access to the account copies.

Indemnification rights

The partners have the right to be compensated for decisions made during the course of business. However, such a choice should only be made in an emergency and should be of the type that a wise person would make.

Right to voice their opinions

Section 12(c) mentions this right. Each partner has the right to express his or her opinion on business matters. They also have the right to have a say in how decisions are made.

Interest rights on capital or advances

In general, partners do not have any interest rights on the capital they invest. However, if they agree to pay interest, the interest will be deducted from the capital. They are also entitled to a 6% interest rate on any advances provided to the firm’s operations.

Right to profit and loss sharing

In the absence of a deed, the partners share profit and loss equally. However, if a partnership agreement specifies a profit-to-loss ratio, profits and losses will be divided in line with the partnership deed.

Duties of the partners

The rights and duties are interrelated. When partners are given rights, there must be some obligations that they must fulfill.

Duty to act diligently

Section 12(b) states that Because his actions will influence the other partners, it is the partners’ responsibility to behave with precaution and vigilance. If his reckless behavior results in the loss or harm of other partners, he is obligated to compensate them.

Duty to indemnify fraud

Section 10 states when partners commit fraud, each partner is responsible for compensating the firm for its losses since the firm is accountable for the partners’ unlawful conduct. If the deception results in damages to other partners, he is obligated to compensate them.

Duty to use the firm property exclusively for the purpose of business

Section 15 of the Act states that the partners can utilise the firm’s property for business purposes only, not for personal gain. The property must be used in a legal manner by the partner.

Duty to hand over personal gains

Section 16 states that all partners should work together to achieve the same goal. They are not permitted to work in any other profession or engage in any business endeavor that is competitive. If they make any money from their firm, they should share it with all of their partners.

General duties 

Section 9 states that it is the responsibility of all partners to make all reasonable efforts to accomplish a shared objective, to give an accurate account, and to disclose all relevant information to partners, or his agent.

These are the rights and duties of the partners mentioned under the Indian Partnership Act and they must be followed for a successful partnership.

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