Page 156 - DMGT407Corporate and Business Laws

Unit 6: Partnership Act and Limited Liability Act

(vi) Mutual agency: Every partner is an agent of the rest of the partners and therefore, his acts Notes
bind the firm. In case of JHF business, it is the Karta who has the authority to contract and
bind the family, other coparcenaries cannot do so.
(vii) Liability: Every partner is liable to an unlimited extent. In case of JHF business, only Karta
is liable to an unlimited extent, the liability of other coparceners is limited to the extent of
their share in the profits of the family business unless they took part in the act or transaction
done by the Karta.

Notes Partnership and Club
A club is an association of persons with the objective of promotion of some beneficial or
social object such as promotion of health or providing recreation for its members. It does
not have the objective of earning profits and if, during the course of its operations, it
makes some surplus, then it is ploughed back for achieving its objectives. A member of a
club is not liable to a creditor of the club. The club is generally brought into existence as an
incorporated body either under the Societies Registration Act, or the Companies Act,
1956. Therefore, a member of a club is not agent of other members and the death or
resignation of a member does not affect its existence. A club differs from partnership
inasmuch as there is no business and thus no motive of earning profits and sharing them.

6.1.7 Various Forms of Partnership

Partnership for a Fixed Period

In this case, the partnership is constituted for a fixed period of time. The partnership comes to an
end at the expiry of the fixed period. However, s.17(b) provides that if the partners continue to
carry on the business after the expiry of the fixed period, the rights and liabilities of partners
remain the same as they were before the expiry of the fixed period and the partnership becomes
a ‘partnership at will’.
Partnership at Will

In accordance with s.7, a partnership is called a partnership at will where; (i) it is not constituted
for a fixed period of time and (ii) there is no provision made as to the determination of partnership
in any other way. Therefore such a partnership has no fixed or definite date of termination.
Accordingly death or retirement of a partner does not affect the continuance of such a partnership.
Section 43(1) provides that such a firm may be dissolved by any partner giving notice in writing
to all the other partners of his intention to dissolve the firm.

Particular Partnership

In accordance with s.8 a particular partnership is one which is formed for a particular adventure
or a particular undertaking. Such a partnership is usually dissolved on the completion of the
adventure or undertaking.

Example: Two auditors, engaged in a particular audit, may be regarded as partners in
the firm created for doing such an audit.

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