Rights of partners under the act of partnership (1932)

Introduction

The partnership is an important factor in the business world, and the rights of Partners play an important role in partnership business. The mutual relation between people known as partners comes into existence with the help of an agreement among the said partners. The agreement is governed under the Indian Partnership Act 1932. This also gives rise to mutual rights and liabilities of partners that are engaged in the said business. The relation among partners is governed with the help of contracts expressed or implied. Multiple sections under the Indian Partnership Act 1932 lay down the rights and duties of partners. For instance, Section 9 to Section 17 of the Indian Partnership Act 1932 governs all the mutual rights and liabilities of partners.

Rights of Partners in business

The mutual rights of partners depending on the contract or agreement among the partners. It is subject to that agreement that the law confers certain rights on the partners they are-

•   Right to have an active part in the business- It is the right of Partners to take part in business management as the business is by the partners. In such businesses, the management power of the partner is co-existing. In cases where the management authority of one partner interferes with the other partner and his right is excluded. The court intervenes and restrains the other partners from doing such an act by mode of prohibition.
•   Right to Interest- A partner has no right to claim any interest in the capital that he provides for the business under the rights of partners in partnership act 1932. There are certain situations where you can get interested in the capital such as-

1.     A legal provision that qualifies the interest
2.     Commercial practice to that effect
3.     Express Agreement or any practice of specific partnership.

•   Right to share profits- Under the rights of partners in the partnership act 1932, they are entitled to share profits equally among each other or as per the provision of the contract. Though if there is hardly any contract, it is the right of every partner to have the Profit of the firm equally.
•   Right to Remuneration- Under the rights and duties of partners, no partner has an entitlement to get any extra pay in the business apart from the profits. The provision is subject to the terms of the contract among the partners. In such cases, the partners are eligible for a reward, and it is the right of Partners to claim such reward. Generally, it is not rare among associates of the firm to come to an agreement that the partner managing the firm will receive more than their share because of all the difficulties they have when conducting the business.

Duties of Partners

There are certain duties apart from rights of Partners of the partners towards each other that emerge from their relationship with one another and in utmost faith. Some of the duties of a partner are as follows-

•   Must act in good faith of the business- The parties or the partners are required to act in utmost good faith or for the betterment of the business involved. They must work to profit the company and should provide real accounts and not make any personal profits. The partner must provide all and complete authentic information on all the matters that affect the company to the partners or their legal representatives. Bentley v. Craven is one such case in which the court held that partners are not entitled to any secret profit.
•   Duty to be diligent- the partners must be diligent in their work. Though for mere errors of judgement or acts that are done in good faith, a partner is not made liable.
•   Duty to account for personal profits- if any of the partners uses the property of the business and makes any personal profit from it. They are accountable to share that Profit and must account for that property.
•   To indemnify for fraud- If there is any loss in the business on the conduct of one partner, he must indemnify for that loss. This helps the partners to deal with the customers fairly. It is one such duty of the partners that you cannot exclude by entering into a contract. This is an absolute provision.

Conclusion

When people come together to form a partnership, they are free to have an agreement and decide their mutual rights and duties. The rights of Partners form an important part of the business. They work in good faith; hence the partners have to work for the common good of the business. When it comes to mutual rights and liabilities of partners, the business depends upon the multiple provisions of the contract. However, there are various rights of partners in the partnership act of 1932 that are conferred by the act when there is no explicit agreement among the partners.