Partnership firm is formed by partners. When partners form a partnership firm they get rights and duties so that they can run the work of the firm well. Sometimes the partners of a partnership firm add specific types of rights and duties in the partnership deed so that they can run the business more efficiently.
Table of Contents
Rights of Partners
Following are the rights of the partners:
1. Right to Participate:
The partners of a partnership firm have an equal right to participate in the day-to-day business activities. No partner can refuse other partners from participating in the business without any special reason.
2. Right to Opinion:
Every partner of a partnership firm has the right to opinion, consultation, and hearing regarding the business. Any partner can express his opinion and his opinion will be heard by all the partners.
3. Right to Inspect:
Each partner has the right to inspect all activities of the business, including day-to-day work, meetings, accounting books, documents and other important elements.
4. Right to Share Profit:
In a partnership firm, profits are shared according to the prescribed sharing ratio. The sharing ratio is determined while drafting the partnership deed.
5. Right to Interest:
The right to interest is applicable only if a clause relating to the right to interest is mentioned in the partnership deed. In the absence of a partnership deed, the partners will be entitled to interest at the rate of 6% per annum on loans given by the partners to the firm.
6. Right to Retire:
Every partner of a partnership firm has the right to retire from the business with the consent of all the partners, no one can retire from the business without the consent of all the partners.
7. Right to Dissolve:
Every partner has the right to dissolve the partnership firm with the consent of all the partners, no one can dissolve the partnership firm without the consent of all the partners.
Note: The above has not fully mentioned the rights of partners in a partnership firm.
Duties of Partners
Following are the duties of the partners:
1. Work Diligently:
The first duty of every partner of a partnership firm is to work diligently. When all the partners work diligently, the business can reach great heights.
2. No Remuneration:
It is the duty of the partners not to receive remuneration from the business as they receive profits from the business, but if the remuneration clause is mentioned in the partnership deed then it is the right of the partner otherwise not.
3. Duty to Share Loss:
If there is a right to share profits then there is also a duty to share losses. Profits and losses are shared as per the profit and loss sharing ratio, the profit and loss sharing ratio is determined while drafting the partnership deed.
4. Indemnify for Negligence:
It is the duty of the partner to indemnify for the loss caused by willful negligence. This is done because the partner was negligent despite knowing.
5. Indemnity for Fraud:
It is the duty of the partner to indemnify for the loss caused by intentional fraud. This is done because the partner committed fraud despite knowing.
Note: The above has not completely mentioned the duties of the partners in a partnership firm.
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QNA/FAQ
Q1. Write the rights of partners.
Ans: Following are the rights of the partners:
1. Right to Participate
2. Right to Opinion
3. Right to Inspect
4. Right to Share Profit
5. Right to Interest
6. Right to Retire
7. Right to Dissolve
Q2. Write the duties of partners.
Ans: Following are the duties of the partners:
1. Work Diligently
2. No Remuneration
3. Duty to Share Loss
4. Indemnify for Negligence
5. Indemnity for Fraud
