These sec-9-13 are attempts to formulate in simple language, the partners’ duties inter se. Two fundamentals duties are laid down first. These are :
(i) Partners are bound to carry only the business of the firm to the greatest common advantage, to be just and faithful to each other and to render true accounts and full information of all things affecting the firm to every partner and/or his legal representative (sec.9) . The sec. postulates complete loyalty between partners in carrying out the business of the firm.
(ii) A partner is bound to indemnify the firm for loss caused to it by his fraud in the conduct of the business of the firm (sec.10), e.g. if he misappropriates moneys paid to him only behalf of the firm by a third person. Notice that the above two secs. create an absolute liability from which, therefore it is not possible for any partner to contract himself out, by as special agreement.
Apart from these two fundamentals rules the rights and duties of partner inter se.may been determined by any contract between the partners (sec.11) , i.e. by any agreement which the partners may choose to enter between themselves, generally called “partnership articles” . Such contract May be express, i.e. interest writing or oral or may been implied, i.e. may been inferred from as long course of dealing between the partners.
ADVERTISEMENTS:
Such as contract can also varied by consent of all partners (which consent, again, may be either express or implied)(sec.11 cl.(i))As sub-sec 2 of sec. 11provides as special provision in the partnership articles that no partners shall carry on any other than the partnership business is not void as being in restraint of trade, as defined by the contract Act(sec.27). Notice that consent of all the partners is required to vary or change the partnership articles.
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Having laid down the above general rules, secs. 12 and 13 proceed to lay down certain special rules which are to operate “subject to contract between the partners”, i.e. if the partnership articles do not otherwise provide. These are:
(i) each partners is entitled to take part interest the conduct of the business of the firm;(ii)each partner is bound to attend diligently to the partnership business ;(iii) only as different arising between the partners with regard to the business of the firm, it shall be determined according to the view of the majority but (iv) notice change in the business of the firm can been introduced without the consent of all partners ;(v)each partner is entitled to have access to, inspect and take copies of the books of account of the firm(sec.12)
ADVERTISEMENTS:
As the sec. points out, however, these duties and rights can always varied by consent. In a privacy Council case,their Lordships allowed a special allowances to a partner only whom the whole burden of carrying on the partnership business was thrown, by other partners not being diligent at all in the conduct of the partnership business . Notice that the privilege of having access to and of inspecting and taking copies of the books of the firm given to partners by the sec. can be exercised by him through a duly authorized agent, but it should not be abused by him, i.e. should not been used by him to cause injury to the firm. If held does held will be restrained by and injunction.
Other rights and liabilities of partners are defined by the sec.13. these are “subject to contract between the partners ” as follows (vi)no partner can claim remuneration for taking part in the business of the firm;(vii) partners entitled to share profits equally are bound to share the losses also in the same manner;(viii) when interest is payable to a partners under the partnership article, only capital subscribed by him, such interest is payable out of the profits, (ix) as regards advances made by a partner to the firm apart from contribution of capital, such partners entitled to claim interest there only at 6 percent per annum. (x) certain mutual indemnities are also provided for by the sec.
They are(a) the firm is bound to indemnify a partner interest respect of payments made and liabilities incurred by him in the conduct of the ordinary business of the firm and for doing an act in an emergency for protecting the firm from loss, if it is such as a prudent man would do interest his own case , under similar circumstance, As partner is bound to indemnify the firm for loss caused to it by his willful neglect in the conduct of the business of the firm(sec.13).
Notice that items (VI) to (x) can always be varied by express agreement, as they very frequently in fact are; thus a managing partners may be given a salary over and above his share; the share of the partners also may be unequal. Notice also that under the last cause of the sec. 13. Viz. cl. a partner is liable to indemnify the firm in case of “willful neglect”, only which mean “doing of a wrongful” act deliberately, i.e. knowing that the same is wrong.” Apparently no indemnity is payable in respect of simple negligence, e.g. an error of judgment.
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Sub-partners: as sub- partners can have no notice demand against the partnership and is not entitled to any relief in a suit against the partnership. Kisanlal Daga v.Shreelal Daga 99 Cal L.J.170. An assignee of a partner’s share of profit is no partner interest that partnership, has been notice demand against it, has no account interest it and must been satisfied with the share of profits given to his assignor. He has notice concern with the accounts to been taken only dissolution.