A Term paper

on

Course title:Law of sale of Goods and Carriage of Goods

Course code:Law 209
Department of Law

Submitted to

Mst.RezwanaKarim

Lecturer,

Department of Law,BAIUST

Submitted by

MD. Main Uddin

Id:5203010
LL.B (level 2, term 2)

Bangladesh Army International University of Science and technology,

 Cantonment Cumilla.

Submitted date:18.12.21

Introduction

Partnership can arise only as result of an agreement or contract, expressed or implied, between
the partners. In Bangladesh, partnership firm is to be formed under the provisions of the
Partnership Act 1932. A partnership is a type of business structure where two or more partners
start an entity to do business. For a partnership to exist there must always be two or more
partners. A non-profit making association is not a partnership in law of Bangladesh.

Partnership Definition

Partnership is defined in the Partnership Act, 1932 is the relation between persons who have
agreed to share all carry the profits of a business or acting for all.

Partnership is “An association of two or more persons to carry on business as co-owners for a
profit. The relationship which exist between persons carrying on business in common with a
view to profit.”

Partnership is a form of business organization created through voluntary agreements of minimum

two and maximum 20 persons (the maximum is 10 in the case of banking business), with the
intention of making and sharing profits among themselves.

Essential Elements of Partnership

1. Voluntary agreement- There must be an agreement entered into by two or more persons

2. Sharing of profits of a Business.-The agreement must be to share the profits of a business

3. Mutual agency- The business must be carried on by all or any of them acting for all.
Partnership and Certain Similar Organization

· Partnership and Co-ownership

· Partnership and a Club

· Partnership and a Company

Classes of Partners

In terms of customs and usages in our region partners may be classified as-

An active partner is one who participates in the business of the firm. Whereas a partner who joins
the firm by agreement by do not take any part in the management of the firm known as nominal
partners. But their liabilities are similar to the active partner. A sub-partner is the transferee of as
share of partner’s interest in a firm. He/she is an owner with 25% of a firm.
Partner Rights and Liabilities

An agreement by the partners creates partnership; they share mutual rights and responsibilities.
So there needs to be consent by all partners in the interest of a business. However, such contracts
are subject to the Partnership Act, 1932. Under general duties, partners are bound to carry on the
business of the firm to the most significant common advantage. They ought to be faithful to each
other with full information of all things affecting the firm to any partners of his legal
representatives (Sec-9). This section contemplates the relationship as one of ‘utmost good faith,’
though partners are not trustees for one another. In some cases, the relationship between partners
is held of a fiduciary character. To conclude, every partner is liable to indemnify the firm for any
loss caused to it by his fraud in the conduct of the business of the firm (Sec-10).

There are some rules between partners in the conduct of management-

I. This is a right entitled to every partner to take part in the management of the
partnership business.

II. Every partner has the right to access to examine and copy books of accounts of the
business.

III. No change can be made like a business without consent from all partners.

IV. Every partner must attend diligently to the business of the firm (Sec-13).

The partners may distribute the work of management among themselves in any way they want.
There may be a partner who takes no part in the part of the business. The contract of a
partnership may provide that he/she will not carry on any business other than that of the firm
while he is a partner, and such agreement is not void on the ground of in restraint of trade [Sec-
11(2)]. It is a personal right by the partner to take part in the business, which cannot be claimed
by the assignee during the continuance of the firm.

Minor’s Partnership in Terms of Business

Partnership can only be created by an agreement under the Partnership Act 1932. However, a
minor can be involved in the benefits of business with consent by all partners, but he cannot be a
partner. Meanwhile, a minor can share the property and profits of the firm, which will be
regulated by the agreement between the partners. But the minor has the privilege of access to the
accounts of the firm, even not being a partner according to sec. 30(1) & (2).

A minor is involved in the benefits of the firm, he might not personally be liable, but his share in
terms of business is liable in the act of the firm. He cannot sue his partners for an account,
payment share of his property, or profits of the firm, but he may do so only when he is serving
his connection with the firm under Sec-30, (3) & (4). Law prescribes that within six months of
attaining his majority, he has to give a public notice intimating his intention to become a partner.
If he fails to give notice, he shall be a partner after the expiry of six months under sec-30, (5).
After attaining the majority and he becomes a partner, his liabilities will be the same as the other
partners.

Retirement of a Partner

o A partner may retire from a partnership with the consent of all the partners or,

o Under an agreement by the partners.

o By giving notice in writing to all the partners. (Sec 32).

o A retiring partner has to give public notice of his retirement.

The expulsion of a partner is possible. Such power is given in the Deed of Partnership, and this
has been used in ‘Good Faith.’ In the position of law, expelling a partner is the same as the
retiring partner.

In the term of Bankruptcy of a Partner, he ceases to be a partner from the date of such
adjudication, whether or not the firm is thereby to be dissolved. If it is provided in the Deed of
Partnership, the bankruptcy of a partner will not dissolve the partnership business.
The death of a partnership has the effect of dissolving the firm. The continuing the firm, even
after the death of the partner, needs to agree on this by the other partners.

Dissolution Mode and Liabilities for Acts Done After the Dissolution

Dissolution of partnership of a firm can be done by the consent of agreement by the entire
partner’s accordance with the contract between the parties. A firm dissolution can be happening
automatically-

a) by the adjudication of all the partners or all but one as bankrupt or

b) any event which makes it an unlawful business of the firm is being carried on.

There also circumstances that a partner has become unsound mind and that insanity must consist
of a permanent nature. After the dissolution of a firm person dealing with its partners is entitled
to assume that they continue to be each other’s agents until notice is given of the dissolution.
However, in order to exempt partner from the liability to third parties for any act done by any of
them subsequent to the dissolution. The partners must give public notice of dissolution so that
customers may know that they are no longer working with the old firm.

Registration of Firms

Partnership Act 1932 prescribes process for the registration of a partnership firm, but
registration is not mandatory. Non-registration does not make any partnership agreement or any
transaction between the parties or third parties. In case of unregistered partnership, one partner
cannot sue another under the Partnership Act. Similarly, a firm cannot file a suit against a third
party to enforce a contractual right. So it is advisable to register the Partnership under the Act.
The registration of such firm is optional. But if registered, a partnership firm can enjoy some
legal rights and facilities.

Ø The formalities of registration-

A statement in the prescribed form deed includes the name of the firm, nature of business, the
capital and property of the firm, the capital of individual partners, term of partnership, provision
for salaries, and drawings on account of profit, rate of interest on partners' capital, advances and
drawings, rights and duties of individual partners, provision for accounts and audit, division of
profits and losses, powers of admission and expulsion of a partner, termination of agreement by
insolvency, death, etc., valuation of goodwill and share of assets on sale or death, and an
arbitration clause.

Ø Prescribed fees.

Ø Time of registration- any time but before file suits.

Rights of Partners

Financial Rights

o Partners share profits equally, unless they agree otherwise.

o Partners share losses according to their share of profits, unless they agree otherwise.

o Any agreement among partners to share losses is binding only on them, not on outsiders.

o Partners are not entitled to any payment beyond their share of profits, unless they agree
otherwise- interest on capital, interest on advance.

o All partnership property belongs to the partnership as a whole, not to the individual partners.

o Application of property

o Right to get indemnity

o Right to share profit after retirement

Right to Transfer Interest

§ Without the approval of the other partners, a partner cannot sell her share; she can only transfer
her right to receive profits and losses.
§ A new partner can only be admitted to a partnership by unanimous consent of the other
partners.

Duties of Partners

 Justice , faithful
 To pay indemnity
 To attend diligently
 No remuneration
 Equality of losses
 Duties of Care- Partners are liable for: gross negligence, reckless conduct, -intentional
misconduct, or a knowing violation of the law.
 Partners are not liable for ordinary negligence.
 Duties of Loyalty Partners have a fiduciary duty to their partnership.
 Some actions which may violate this fiduciary duty include:

1. Competing with the partnership

2. Taking a business opportunity away from the partnership
3. Using partnership property for private profit , secret profit
4. Conflicts of interest

 Unlimited liability

Conclusion

The partnership business plays a dominant role in the trade sector in Bangladesh. Partnership Act
1932 prescribes process for the registration of a partnership firm, but registration is not
mandatory. Non-registration does not make any partnership agreement or any transaction
between the parties or third parties. In case of unregistered partnership, one partner cannot sue
another under the Partnership Act. Similarly, a firm cannot file a suit against a third party to
enforce a contractual right. So it is advisable to register the Partnership under the Act.