Indian Partnership Act,1932

In simple terms: Partnership is the bond between two or more  people who have agreed to carry on some work for profit. It is based on  mutual consent.

Definition: According to Section(4) of the Indian Partnership Act 1932, defines ‘Partnership- as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’. Some of the important features of the partnership are as follows:

    1. Contract: It is the result of a contract, it does not arise from the status, operation of law or inheritance. Which means in order to have a partnership , you  need to create a contact i.e an agreement enforceable by law.
      For example: Death of father, who was a partner in a firm, the son can claim share in the partnership property but cannot become a partner unless he enters into a contract.
    2. Association of two or more persons: As partnership is the result of a contact, at least two persons are necessary to constitute a partnership. It states that for a partnership firm , minimum number of person required are two because contract is signed minimum by two persons.
      But sec 11 of Company’s act -1956 states that partnership consisting of more than 10 persons for banking business and 20 persons for any other business would be illegal.
    3. Carrying on a business: Partnership only for friendship means or charitable work  is not a partnership firm . Partners must agree to carry on a business.”Business includes every trade, occupation or profession”.
    4. Sharing of profits:  Agreement to carry on business must be with the object of sharing profits amongst all the profits. Thus there will be no partnership where the business is carried on with a philanthropic motive and note for making a profit or where only one of the partners is entitled to the whole of the profits of the business.
      Sharing of loss is not necessary.
    5. Mutual Agency: Business must be carried on by all the partners or any of them acting for all, i.e there must be mutual agency . Thsu every partner is both an agent and principle for himself and other partners i.e he can bind by his acts the other partners and can be bound by the acts of other partners in the ordinary course of action.

Bailment Contracts

Bailment contracts are a contract where one party delivers goods to the other party upon the return basis in order to fulfil a specific purpose is called bailment contracts. It includes two parties ; bailee and bailer.  

  • Bailer:  The bailer is a person who is delivering the goods.
  • Bailee:  The person to whom the goods are delivered.

Types of Bailment Contracts:

Generally bailment contracts are classified into:

  1. Gratuitous Bailment:  These are contracts where only one party is benefited i.e one directional consideration.
    Example: If Ram is going to abroad for further studies and he hands over his old bicycle to his friend shyam for  safe custody. Here only bailer (Ram) is benefited.
  2. Non-Gratutious Bailment:  In this case both the parties are benefited i.e it is a two directional consideration.
    Example: B hands over his clothes to D (laundary owner) for washing purpose. Here B(bailer) is awarded with clean clothes and D(bailee) gets the payment of his service.

Rights of Bailor:

  1. Enforcement of bailee’s duties
    • Right to claim damages for loss caused to the goods bailed by bailee’s negligence.
    • Right to claim compensation for any damage arising from or during unauthorised use of the goods bailed.
    • Right to claim compensation for any loss caused by the unauthorised mixing of goods bailed with his own goods.
    • Right to claim any natural accretion to the goods bailed.
  2. Right to terminate bailment if the bailee uses the goods wrongfully.
  3. Right to demand return of goods in case of gratutious bailment.

Rights of Bailee:

  1. Enforcement of bailors duties
    • Right to claim damages for loss arising from the undiscovered faults in the goods bailed.
    • Right to claim reimbursement for extraordinary expenses incurred in relation to the things bailed.
    • Right to indemnify for any loss suffered by him by reason of defective title of the bailer to the goods bailed.
    • Right to claim compensation for expenses incurred for the safe custody of the goods if the bailor has wrongfully refused to take delivery of them after the term of bailemt is over.
  2. Right to deliver goods to one of several joint bailor.
  3. Right to deliver goods, in good faith, to bailor without title.
  4. Right of lien( Right of retaining goods till the debts are paid)

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