Partnership Act, 1932 – Overview
The Partnership Act, 1932 governs the formation, operation, and dissolution of partnership businesses in Bangladesh and India. It lays down the legal rights and duties of partners among themselves and in relation to third parties.
Definition of Partnership
According to Section 4 of the Act, a partnership is 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.
Essential Elements of a Partnership
- Agreement between two or more persons.
- Business must be carried on.
- Sharing of profits.
- Mutual agency among partners.
Key Provisions of the Partnership Act, 1932
| Section | Description |
|---|---|
| Section 5 | Partnership arises from contract, not from status. |
| Section 9 | Partners are bound to carry on the business for the greatest common advantage. |
| Section 18 | Partner to act as an agent of the firm. |
| Section 32 | Retirement of a partner from the firm. |
| Section 42 | Dissolution of a firm under certain circumstances. |
Types of Partnerships
- General Partnership
- Partnership at Will
- Particular Partnership
- Limited Partnership (under special laws)
Conclusion
The Partnership Act, 1932 provides a structured and fair framework for running partnership businesses, protecting the rights of partners, and ensuring smooth dispute resolution. Understanding this Act is crucial for entrepreneurs planning to enter into a partnership venture.
