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Mercantile Laws-I

Notes firm by recording an entry of the statement in a register called the Register of Firms and shall fi le

the statement (Sec.59). He then issues under his hand a Certificate of registration. Registration is

effective from the date when the Registrar files the statement and makes entries in the Register
of Firms.
10.2.2 Registration of Firms is Optional

The Act does not provide for compulsory registration of firms. It is optional and there is no
penalty for non-registration. But at the same time Sec.69 has effectively, ensured registration of

firms by introducing certain disabilities that an unregistered firm suffers from. The fi rm cannot.
10.3 Partnership Deed

10.3.1 A Partnership can be Formed either by Oral or Written Agreement

In France and Italy, the law requires all partnership agreements to be in writing. But in England,
USA and India, written agreement is not compulsory. But in order to avoid misunderstanding
and litigation, it is desirable to enter into a written agreement which is called Partnership deed
or agreement. The partnership deed is required to be stamped according to the provisions of the
Stamp Act, 1899. Each partner should possess a copy of the Deed.

10.3.2 Partnership Agreements and Contract Law

Sec.3 provides that the unrepealed provisions of the Indian Contract Act, 1872 save insofar
as they are inconsistent with the provisions of this Act, shall continue to apply to fi rms. Also

Sec.2(e) provides that “expressions used but not defined in this Act and defined in the Indian
Contract Act, 1872, shall have the meanings assigned to them in that Act”. As a partnership
agreement is a contract, the provisions of the Indian Contract Act, 1872, are applicable to it.

Task A publisher agreed to publish, at his own expense, a book written by B and to share

the profits equally. B wanted to terminate the partnership by notice after publication of
tenth edition of the book. Can he do so?

10.4 Relations of Partners to One Another

The relation of the partners of a firm to one another arises through an agreement between them.

Such an agreement may be express or may be implied from the course of dealings between them.
It may be varied by their consent and such consent may be expressed or may be implied by a

course of dealings [Sec.11 (1)]. Where there is no specific agreement or where the agreement is
silent at a certain point, or where no agreement exists, the relations of partners to one another as
regard their rights and duties are governed by Secs.9-17 of the Act.

10.4.1 Rights of Partners

Subject to the contract between the partners, every partner has the following rights:
1. To take part in the conduct of the firm’s business [Sec.12(a)].

2. To express his opinion on any matter, but in case of difference of opinion regarding ordinary
matters of the business, he is bound by the majority decision. However, no change can be
made in the nature of the business without the consent of all the partners [Sec.12(c)].

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