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Right to take part in the conduct of the business

Sec 12(a) specifies that, in the absence of any agreement between the partners, every partner has the right to take part in the management of the business. This is however subject to a contract between the partners i.e. the partners may provide by a contract, that this right shall not be available to some partners.

Right to be consulted

Every partner has an inherent right to be consulted in all matters affecting the business of the partnership firm and express his views before any decision is taken by the partners.

 

Note: Sec 12(c) specifies that when any difference arises between the partners with regard to:

  • ƒOrdinary matter connected with the business of the firm, it may be decided by the majority vote.
  • ƒFundamental matters like change in the nature of business or reconstitution of a firm, decisions can be made only with the consent of all the partners.

Right to receive remuneration Sec. 13(a)

No partner is entitled to receive any remuneration in addition to his share in the profits of the firm for taking part in the business of the firm. However, the partnership agreement may expressly provide for the payment of remuneration to the working partners.
 
Mere payment of remuneration does not make any partner an employee of the firm as the partner and the firm is one and the same. Therefore any payment made in the form of remuneration to a partner is nothing but a distribution of the profits of the firm.

Right to receive interest on capital

As a general rule, partners have no right to receive interest on capital for their contribution towards capital [Sec. 13(c)]. However, the partnership agreement may provide that the partners shall be entitled to interest on capital. In such cases, the interest will be payable only out of profits. If the firm suffers any loss, then the partners are not entitled to interest on capital.

 

Note: If the deed provides then interest on capital can also be paid even if there is loss.

Interest on advances

The partner is entitled to claim interest on the advance made by him over and above his capital at the rate of 6% per annum according to Sec. 13 (d). The interest on advances keeps running even after dissolution up to the date of payment.

 

Note: Interest on advance is payable even if the firm suffers loss.

Right to share profits

Partnership is formed to share the profits of a business. Each partner is entitled to share the profits equally: Sec 13(b). Partners may also agree to share profits in different proportions.

Right to access the books of accounts

Every partner is entitled to have access to any book of the firm. They have the right to examine all the records, books and accounts of the firm and take a copy thereof. The partners may agree by contract, that this right shall not be available to some partner or partners.

Right to be indemnified

In an emergency, a partner has the authority to do all such acts for the purpose of protecting the firm from loss. Every such partner has the right to be indemnified by the firm with respect to the payments made and the liabilities incurred by him in the ordinary and proper conduct of the business.

Right to be consulted at the time of admission of a new partner

It is the right of every partner to be consulted at the time of admitting a new partner in the firm. Every partner has a right to prevent the introduction of a new partner unless he gives his consent to it. This is because, a partnership is found on mutual trust and confidence.

Right to use partnership property

Partnership property is the joint property of all the partners. It is the right of every partner to use the firm’s property, but for the purpose of partnership business only. No partner has a right to treat the partnership property as his individual property.

 

Note: If a partner uses the property of the firm directly or indirectly for his private purpose, he must account to the firm for the profits which he has earned by the use of that property. On the other hand if a partner provides his personal property to the firm for the purpose of conducting the partnership business then such property does not become the property of the firm.

Right not to be expelled

Every partner has the right to continue in the firm and he cannot be expelled from it by the other partners. However, the partners may enter into a contract providing for expulsion of a partner by the consent of majority of the partners. But such powers must be exercised in good faith.

Right to retire

Every partner has the right to retire from the partnership,
  • With the consent of all other partners
  • In the case of partnership at will, by giving notice to that effect to all other partners and
  • As per the express agreement among the partners

Right to share subsequent profits

Sometimes, after the retirement of a partner, the remaining partners do not return the share of the retired partner’s property, but use the same in the business of the firm. In such a case, the retiring partner has the right to claim the profit earned by the use of his share of property or the outgoing partner may opt for receiving an interest at the rate of 6% per annum on the amount of his share in the property of the firm.




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