Relations of Partners to One Another Abhedya Rajeev BASICS OF LAW Thu, Aug 06, 2020, at ,09:24 PM There are two rudimentary principles which govern the relation of partners to one another. The first principle stays that all the partners in a partnership firm are free to form an agreement with regard to their mutual rights and duties. Nonetheless, there are certain duties mentioned in The Indian Partnership Act, 1932 which cannot be altered by entering into an agreement to the contrary. Section 11 of the Act gives legislative recognition to this principle. The second principle is of rudimental nature. It provides that the relation of partners to one another is of the extreme good faith. It provides that each partner is an agent of each other; therefore, the contract entered by one of the partners will bind each and every one the partners. Thus, the relation of partners to one another is based on mutual trust and confidence. The principle is acknowledged by Section 9 of the Partnership Act. The Indian Partnership Act, 1935 has prescribed some provisions to govern the relationship of partners amongst them, and these provisions are applicable if no partnership deeds exist. Where partnership deed is an agreement or contract among the partners which determines their rights and duties. It may differ by express or implied consent of partners. The following are the rights and duties specified under Act. Partners can exercise these rights and duties unless the deed states otherwise. Rights of partners amongst them: Right to participate in business: According to section 12(a), each partner has an equal right to take part in the conduct of their business. Partners can hold back this right to allow only some of them to contribute to the functioning of the business if the partnership deed states so. Right to express opinions: According to section 12(c), the partners have the right to freely express their opinion. Partners, by a majority, can decide differences with respect to ordinary matters connected with the business. Each partner can express his opinion to determine such matters. Right to access books and accounts: According to section 12(d), each partner can inspect and copy books of accounts of the business. This right is applicable uniformly to active and dormant partners. Right to share profits: According to 13(b), partners generally describe in their deed the proportion in which they will share profits of the firm. But, they have to share all the profits of the firm equally if they have not agreed on a fixed profit sharing ratio. Right to be indemnified: According to section 13(e), partners can make some payments and incur liabilities through their decisions in the course of their business. They can allege indemnity from each other for these decisions. Such decisions must be taken in circumstances of emergency and should be of such nature that an ordinarily prudent person would resort to under similar conditions. Right to interest on capital and advances: Under sections 13(c) and 13(d), partners generally do not get an interest on the capital they contribute. In case they make a decision to take an interest, such payment must be made only out of profits. They can, still, receive interest of 6% p.a. for other advances made subsequently towards the business. Duties of Partners amongst them: General duties: Every partner has the subsequent general duties like carrying on the business to the greatest common good, duty to be just and faithful towards each other, rendering true accounts, and providing full information of all things affecting the firm. etc Duty to indemnify for fraud: Every partner has to indemnify the firm for losses caused to it by his fraud in carry out of business. The Act has adopted this principle for the reason that the firm is liable for wrongful acts of partners. Any partner who commits deception must indemnify other partners for his actions. Duty to act diligently: Every partner must be present at to his duties towards the firm as diligently as possible since his not functioning diligently affects other partners as well. He is accountable to indemnify others if his willful neglect causes losses to the firm. Duty to use the firm’s property properly: Partners can use the firm’s property solely for its business, and not for any personal purpose, as they all own it collectively. Hence, they must be vigilant while using these properties. Duty to not earn personal profits or to compete: Each partner must function in line with commonly shared goals. They should not make any private profit and must not engage in any challenging business venture. They should entrust personal profits made to their firm. CONCLUSION In a partnership, the partners are free to outline an agreement and decide the mutual rights and duties. Relation of partners in the partnership is of paramount good faith; hence, it is the duty of every partner to work for the furthermost common advantage of the firm and to work diligently in order to stay away from any loses to the firm. While deciding the shares of the partners in a firm it becomes very important to determine the partnership property. Theoretically speaking, the partnership property is not anything but the joint property of every partner.