partnership

Section 4 of the Indian Partnership Act, 1932 defines partnership. Its elements are: an agreement (partnership arises from contract, not status), a business, sharing of profits, and mutual agency, meaning each partner is an agent of the firm and of the others. Mutual agency is the real test; sharing profits alone does not prove a partnership.

A firm is not a separate legal person; partners are jointly and severally liable for its debts without limit. Registration is not compulsory, but an unregistered firm and its partners suffer the disabilities in section 69. A limited liability partnership under the LLP Act, 2008 is a different body corporate. A Hindu undivided family business is not a partnership because it arises by birth.

Example

Since the arrangement involved sharing of profits and each party acting for the others, the court held that a partnership existed under section 4.

In Indian law

• s.4, Indian Partnership Act, 1932 (definition)
• s.6, Indian Partnership Act, 1932 (mode of determining existence of partnership)
• s.69, Indian Partnership Act, 1932 (effects of non-registration)

See also

partnership deed · agency · contract

Read more in the study notes

• Separation of powers and its bearing on administrative law (Administrative Law)
• Classification of administrative action (Administrative Law)
• Control of delegated legislation: parliamentary, procedural and judicial (Administrative Law)
• The rule against bias (Administrative Law)
• Reasoned decisions, exceptions to natural justice, effect of breach and Article 136 (Administrative Law)
• Government contracts and state liability: the administrative-law angle (Administrative Law)