Duties Of Partnership

Introduction

When two or more people come together to form a partnership, they agree to undertake specific duties and responsibilities in order to run the business. These duties and responsibilities are set out in the Partnership Act 1932, and this article will discuss some of the key duties of partners. In particular, we will look at the general duties of partners, as well as the specific rights and duties of partners in a partnership firm.

Rights And Duties Of Partnership Act 1932

Partners in a partnership firm have a number of specific duties which are set out in the Partnership Act 1932. These duties include the duty to account and the duty to disclose information. We will look at each of these duties in turn.

The Duty To Account

This duty requires partners to keep proper accounts of all partnership transactions and to produce these accounts when required by the other partners. Partners must also ensure that the accounts are accurate and up-to-date.

The Duty To Disclose Information

Partners also have a duty to disclose all information relevant to the partnership to the other partners. This includes information about the partnership’s assets, liabilities, profits, and losses. Partners must also disclose any agreements they have made relating to the partnership business.

Rights

In addition to their duties, partners also have specific rights which are set out in the Partnership Act 1932. The most important of these rights is the right to share in the profits and losses of the partnership. Other rights include the right to inspect partnership books and documents, and the right to receive information about the partnership business.

General Duties of Partners

In addition to the specific duties and rights set out in the Partnership Act 1932, partners also have a number of general duties that apply to all partnerships. These general duties include the duty to act in good faith and the duty not to compete with the partnership business. These are-

• The duty to act in good faith- Partners must always act in good faith towards each other and the partnership business. This means that they must not take any action which is harmful to the partnership or its interests.
• The Duty Not To Compete With The Partnership Business- Partners must not compete with the partnership business, either directly or indirectly. This means that they must not set up or be involved in any business which is competing with the partnership.
• To keep proper accounts and produce accurate information
• To disclose all relevant information to the other partners
• To share in profits and losses of the partnership.

Partnership rights:

• The right to share in profits and losses of the partnership
• The right to inspect partnership books and documents
• The right to receive information about the partnership business.

Duties Of Partners in a Partnership Firm

In a partnership firm, each partner has specific rights and duties which are set out in the Act. For example, section 31 states that all partners have a duty to keep proper accounts of their dealings with the partnership and produce these accounts when required by other partners.

As well as this, section 32 states that each partner has an obligation to make full disclosure about all matters concerning the partnership to other partners. This means that you must tell your fellow partners anything that could reasonably be seen to affect their interests in the business.

Conclusion

In conclusion, partners have a number of specific rights and duties which are set out in the Partnership Act 1932.  By understanding their rights and duties, partners can ensure that they are able to carry out their role in the partnership effectively and to the best of their abilities.