Rights Of A Partner
- Right to take part in Business
The partnership agreement usually provides the mode of the conduct of the business. Subject to pay such agreement between the partners, every partner has a right to take part in the conduct of business [Sec. 12(a)]. This is based on the general principal that partnership business is the common business of all the partners.
- Right to be Consulted
Every partner has an inherent right to be consulted in all matters affecting the business of the partnership and express his views before any decision is taken by the partners.
- Right of Access to Accounts
Subject to contract between the partners, every partner has a right to have access to and inspect and copy any of the books of the firm.
- Right to Share in Profit
In the absence of any agreement, the partners are entitled to share equally in the profits earned and are liable to contribute equally to the losses sustained by the firm.
- Right to Interest on Capital
The partnership agreement may contain a clause as to the right of the partners to claim interest on capital at a certain rate. Such interest, subject to contract between the partners, is payable only out of profits, if any, earned by the firm.
- Right to Interest on Advances
Where a partner makes, for the purposes of the business of the firm, any advance beyond the amount of capital, he is entitled to interest on such advance at the rate of six per cent annum. Such interest is not only payable out of the profits of the business but also out of the assets of the firm.
- Right to be Indemnified
A partner has authority, in an emergency, to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence, in his own case, acting under similar circumstances. Such acts of the partner bind the firm. If as a consequence of any such act, the partner incurs any liability or makes any payment, he has a right to be indemnified.
- Right to the Use of Partnership Property
Subject to contract between the partners, the property of the firm must be held and used by the partners exclusively for the purposes of the business of the firm. No partner has a right to treat it as his individual property. If a partner uses the property of the firm directly or indirectly for his private purpose, he must account to the firm for the profits which he may have earned by the use of that property.
- Right of Partner as Agent of the Firm
Every partner for the purposes of the business of the firm is the agent of the firm.
- No New Partner to be Introduced
Every partner has a right to prevent the introduction of a new partner unless he consents to that or unless there is an express term in the contract permitting such introduction. This is because partnership is founded on mutual trust and confidence.
- No Liability before Joining
A person who is introduced as a partner into a firm is not liable for any act of the firm done before he became a partner.
- Right to Retire
A partner has a right to retire (a) with the consent of all other partners, or (b) in accordance with an express agreement between the partners, or (c) where the partnership is at will, by giving notice to all the other partners of his intention to retire.
- Right of Outgoing Partner to Share in the Subsequent Profits
Where a partner has died, or has ceased to be a partner by retirement, expulsion, insolvency, or any other cause, the surviving or continuing partners may carry on the business with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate. In such a case, legal representative of the deceased partner or the outgoing partner is entitled to such share of the profits as is proportionate to his share in the property of the firm.