Вы находитесь на странице: 1из 32

PERFORMANCE OF OBLIGATION

IS NECESSARY FOR
PARTNERSHIP

UNIVERSITY OF CENTRAL PUNJAB

Table of Contents
PARTNERSHIP ACT 1932............................................................................................. 5
PRELIMINARY.............................................................................................................. 5
DEFINITIONS:.............................................................................................................. 5
Definition of "partnership", "partner", "firm" and "firm name"...................................5
ESSENTIAL ELEMENTS OF PARTNERSHIP.....................................................................6
FEATURES OF PARTNERSHIP FORM OF BUSINESS ORGANIZATION..............................7
A.

Two or more Members:......................................................................................... 7

B.

Agreement:.......................................................................................................... 7

C. Lawful Business:................................................................................................... 7
D.

Competence of Partners:...................................................................................... 8

E.

Sharing of Profit................................................................................................... 8

F.

Unlimited Liability................................................................................................ 8

G. Voluntary Registration.......................................................................................... 8
H. No Separate Legal Existence................................................................................ 9
I.

Principal Agent Relationship................................................................................. 9

J.

Restriction on Transfer of Interest........................................................................9

K.

Continuity of Business.......................................................................................... 9

Partnership not created by status:............................................................................. 9


Mode of determining existence of partnership:........................................................10
Act not applies to certain relationships:...................................................................10
Partnership at will:.................................................................................................... 10
Particular Partnership:.............................................................................................. 10
CLASSIFICATION OF PARTNERSHIPS..........................................................................11
i.

Family Partnership:............................................................................................. 11

ii.

General Partnership:.......................................................................................... 11

iii. Implied Partnership:........................................................................................... 11


iv. Limited Partnership:........................................................................................... 11
v.

Particular Partnership:........................................................................................ 11

vi. Partnership at will:............................................................................................. 11


vii.

Partnership in Commendams:.........................................................................12

UNIVERSITY OF CENTRAL PUNJAB

viii.

Special Partnership:........................................................................................ 12

ix. Secret Partnership:............................................................................................. 12


x.

Statutory Partnership:........................................................................................ 12

xi. Universal Partnership:........................................................................................ 12


ADVANTAGES OF PARTNERSHIP FIRM........................................................................13
DISADVANTAGE OF PARTNERSHIP FIRM....................................................................13
PARTNERSHIP DEED.................................................................................................. 14
CONTENTS OF PARTNERSHIP DEED..........................................................................14
FORMATION OF PARTNERSHIP...................................................................................15
a)

Establishment:................................................................................................... 15

b) Term:.................................................................................................................. 15
c)

Name:................................................................................................................ 15

d) Place of Business:.............................................................................................. 15
e) New Partners:..................................................................................................... 15
DETERMINATION OF PARTNERSHIP...........................................................................16
General:...................................................................................................................... 16
Dissolution:.................................................................................................................. 16
Determination:.............................................................................................................. 16
RELATIONS OF PARTNERS TO ONE ANOTHER...........................................................17
General Duties of Partners........................................................................................ 17
Duty to Indemnify For Loss Caused By Fraud:..........................................................17
Determination of Rights and Duties of Partners By Contract Between The Partners:
................................................................................................................................. 17
Agreements in Restraint Of Trade:............................................................................17
The conduct of the business:............................................................................................. 17
MUTUAL RIGHTS AND LIABILITIES............................................................................. 18
RIGHTS AND DUTIES OF PARTNERS AFTER A CHANGE IN THE FIRM.........................19
RIGHTS OF PARTNER................................................................................................. 19
Right to Manage Business:............................................................................................... 19
Partners authority in emergency:....................................................................................... 20
DUTIES OF PARTNERS............................................................................................... 21
I.

Duty to carry on business:.................................................................................21

II.

Duty to maintain true accounts:.........................................................................21

UNIVERSITY OF CENTRAL PUNJAB

III.

Duty to keep secrecy:...................................................................................... 21

IV.

Duty to provide information:...........................................................................21

V.

Duty to compensate:.......................................................................................... 21

VI.

Duty to abide by the decisions:.......................................................................21

VII.

Duty to share the loss:.................................................................................... 21

VIII.

Duty not to use firm property for his own.......................................................21

IX.

Sincere and faithful:........................................................................................ 21

X.

Duty to indemnify for willful neglect:.................................................................22

XI.

Duty not to carry other business.....................................................................22

XII.

Duty to pay profit to firm:...............................................................................22

XIII.

Duty to be liable jointly and severally:............................................................22

XIV.

Duty not to transfer his rights:........................................................................22

RELATION OF PARTNER WITH THIRD PARTY..............................................................23


RELATIONS OF PARTNERS TO THIRD PARTIES...........................................................24
Partner to be agent of the firm:................................................................................ 24
Implied authority of partner as agent of the firm:....................................................................24
PARTNER OBLIGATIONS............................................................................................. 25
A.

Practice Development:....................................................................................... 25

B.

Management Contribution:................................................................................. 25

C. Skill and Knowledge Transfer:.............................................................................26


D. Personal Economic Contribution:........................................................................26
DISSOLUTION OF PARTNERSHIP................................................................................28
CIRCUMSTANCES OF DISSOLUTION:..........................................................................28
STEPS TO BE TAKEN ON DISSOLUTION:....................................................................29
BIBLOGRAPHY........................................................................................................... 30

UNIVERSITY OF CENTRAL PUNJAB

PARTNERSHIP ACT 1932


PRELIMINARY
1. Short title, extent and commencement.(1) This Act may be called the Partnership Act,
1932.
[(2) It extends to the whole of Pakistan.]
(3) It shall come into force on the 1st day of October, 1932, except section 69, which Shall come
into force on the 1st day of October, 1933.

DEFINITIONS:
In this Act, unless there is anything repugnant in the subject or context
An "act of a firm" means any act or omission by all the partners or by any
partner or
Agent of the firm which gives rise to a right enforceable by or against the
firm,
"Business" includes every trade, occupation and profession;
"Prescribed" means prescribed by rules made under this Act;
"Third party" used in relation to a firm or to a partner therein means any
person who is not a partner in the firm; and
Expressions used but not defined in this Act and defined in the Contract
Act (IX of 1872) shall have the meanings assigned to them in that Act.

Definition of "partnership", "partner", "firm" and "firm


name"
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. Persons
who have entered into partnership with one another are called
individually partners" and collectively "a firm" and the name under
which their business is carried on is called the "firm name".

UNIVERSITY OF CENTRAL PUNJAB

ESSENTIAL ELEMENTS OF PARTNERSHIP

Essential elements of Partnership

Two or more

Sharing of profit

Mutual agency

Persons

Business
An agreement

UNIVERSITY OF CENTRAL PUNJAB

FEATURES OF PARTNERSHIP FORM OF BUSINESS


ORGANIZATION
After having a brief idea about partnership, let us identify the various
features of this form of business organization.

A. Two or more Members:


You know that the members of the partnership firm are called partners. But do you know how
many persons are required to form partnership firm? At least two members are required to start
a partnership business. But the number of members should not exceed 10 in case of banking
business and 20 in case of other business. If the number of members exceeds this maximum
limit then that business cannot be termed as partnership business. A new form of business will be
formed, the details of which you will learn in your next lesson.

B. Agreement:
Whenever you think of joining hands with others to start a partnership business, first of all, there
must be an agreement between all of you. This agreement contains

The amount of capital contributed by each partner;


Profit or loss sharing ratio;
Salary or commission payable to the partner, if any;
Duration of business, if any ;
Name and address of the partners and the firm;
Duties and powers of each partner;
Nature and place of business; and
Any other terms and conditions to run the business.

C. Lawful Business:
The partners should always join hands to carry on any kind of lawful business. To indulge in
smuggling, black marketing, etc., cannot be called partnership business in the eye of the law.
Again, doing social or philanthropic work is not termed as partnership business.

UNIVERSITY OF CENTRAL PUNJAB

D. Competence of Partners:
Since individuals join hands to become the partners, it is necessary that they must be competent
to enter into a partnership contract. Thus, minors, lunatics and insolvent persons are not eligible
to become the partners. However, a minor can be admitted to the benefits of partnership i.e., he
can have a share in the profits only.

E. Sharing of Profit
The main objective of every partnership firm is sharing of profits of the business amongst the
partners in the agreed proportion. In the absence of any agreement for the profit sharing, it
should be shared equally among the partners. Suppose, there are two partners in the business and
they earn a profit of Rs. 20,000.They may share the profits equally i.e., Rs. 10,000 each or in any
other agreed proportion, say one forth and three fourth i.e. Rs 5,000/- and Rs. 15000/F. Unlimited Liability
-Just like the sole proprietor the liability of partners is also unlimited. That means, if the assets of
the firm are insufficient to meet the liabilities, the personal properties of the partners, if any, can
also be utilized to meet the business liabilities. Suppose, the firm has to make payment of Rs.
25,000/- to the suppliers of goods. The partners are able to arrange only Rs. 19,000/- from the
business. The balance amount of Rs. 6,000/- will have to be arranged from the personal
properties of the partners.

G. Voluntary Registration
It is not compulsory that you register your partnership firm. However, if you dont get your firm
registered, you will be deprived of certain benefits, therefore it is desirable. The effects of nonregistration are:

Your firm cannot take any action in a court of law against any other parties for settlement

of claims.
In case there is any dispute among partners, it is not possible to settle the disputes

through a court of law.


Your firm cannot claim adjustments for amount payable to or receivable from any other
parties.

UNIVERSITY OF CENTRAL PUNJAB

H. No Separate Legal Existence


Just like sole proprietorship, partnership firm also has no separate legal existence from that of it
owners. Partnership firm is just a name for the business as a whole. The firm means the partners
and the partners collectively mean the firm.

I. Principal Agent Relationship


All the partners of the firm are the joint owners of the business. They all have an equal right to
actively participate in its management. Every partner has a right to act on behalf of the firm.
When a partner deals with other parties in business transactions, he/she acts as an agent of the
others and at the same time the others become the principal. So there always exists a principal
agent relationship in every partnership firm.

J. Restriction on Transfer of Interest


No partner can sell or transfer his interest to any one without the constant of other partners. For
example - A, B, and C are three partners. A wants to sell his share to D as his health does not
permit him to work anymore. He cannot do so until B and C both agree.

K. Continuity of Business
A partnership firm comes to an end in the event of death, lunacy or bankruptcy of any partner.
Even otherwise, it can discontinue its business at the will of the partners. At any time, they may
take a decision to end their relationship.

Partnership not created by status:


The relation of partnership arises from contract and not from status
And in particular the members of a Hindu undivided family carrying on a
family business as such, or a Burmese Buddhist husband and wife carrying
on business as such are not partners in such business

Mode of determining existence of partnership:


In determining whether a group of persons is or is not a firm, or
whether a person is or is not a partner in a firm, regard shall be

UNIVERSITY OF CENTRAL PUNJAB

had to the real relation between the parties as shown by all


relevant facts taken together

Act not applies to certain relationships:


Nothing contained in this act shall apply to a relationship
created by any agreement between Banking company and a
person or group of persons providing for sharing of profits and
losses arising from and relating to the provision by the Banking
Company of finance to such person or group of persons

Explanation For the purpose of this section, Banking Company and finance
shall have the same meanings as in the Banking tribunals ordinance, 1981

Partnership at will:
Where no provision is made by contract between the partners for the
duration of their partnership, or for the determination of their partnership
the partnership is "partnership at will".

Particular Partnership:
A person may become a partner with another person in particular
adventures or undertakings.

CLASSIFICATION OF PARTNERSHIPS
i.

Family Partnership:
One which family members control by being partners.

UNIVERSITY OF CENTRAL PUNJAB

ii.

General Partnership:
A partnership in which the parties carry on all their trade and business. It
may be for the joint benefit and profit of all the parties concerned.

iii.

Implied Partnership:
One which is not a real partnership but which is recognized by the court
as such because of the conduct of the parties; in effect, the parties are
estopped from denying the existence of a partnership.

iv.

Limited Partnership:
A partnership consisting of one or more general partners, jointly and
severally responsible and who are not liable for the debts of the
partnership beyond the fund so contributed.

v.

Particular Partnership:
One existing where the parties have united to share the benefits of a single
individual transaction or enterprise.

vi.

Partnership at will:
One designed to continue for no fixed period of time, but only during the
pleasure of the parties and which may be dissolved by any partner without
previous notice.

vii.

Partnership in Commendams:
A partnership formed by a contract by which one person or partnership
agrees to furnish the other a certain amount or property on condition of
receiving a share in the profits.

viii.

Special Partnership:
At common law, one formed for the prosecution of a special branch of
business, as distinguished from the general business of the parties.

UNIVERSITY OF CENTRAL PUNJAB

ix.

Secret Partnership:
One where the existence of certain persons as partners is not avowed to
the public by any of the partners.

x.

Statutory Partnership:
A statutory creation in some states which resembles a corporation more
than a partnership, but which has many attributes of the limited
partnership.

xi.

Universal Partnership:
One in which the partners jointly agree to contribute to the common fund
of the partnership the whole of their property, of whatever character, and
future, as well as present

UNIVERSITY OF CENTRAL PUNJAB

ADVANTAGES OF PARTNERSHIP FIRM

Easy to form:
Availability of large resources:
Better decisions:
Flexibility in operations:
Sharing risks:
Benefits of specialization:

DISADVANTAGE OF PARTNERSHIP FIRM

Unlimited liability:
Uncertain.
No transferability of share:
Lack of harmony:
Limited capital:

UNIVERSITY OF CENTRAL PUNJAB

PARTNERSHIP DEED
A partnership is formed by an agreement. This agreement may be in writing or oral.
Though the law does not expressly require that the partnership agreement should be in
writing, it is desirable to have it in writing in order to avo8id any dispute with regard to
the terms of the partnership. The document which contains the term of a partnership as
agreed among the partners is called partnership deed.
The partnership Deed is to be duly stamped as per the Stamp Act, and duly signed by all
the partners.

CONTENTS OF PARTNERSHIP DEED


A partnership deed may contain any matter relating to the regulation of partnership but all
provisions in the deed should be within the limits of Partnership Act, 1932. However, A
Partnership Deed should contain the following clause:
Nature of business
Duration of partnership
Name of the firm
Capital
Share of partners in profits and losses
Bank Account firm
Books of account
Powers of partners
Retirement and expulsion of partners
Death of partner
Dissolution of firm
UNIVERSITY OF CENTRAL PUNJAB

Settlement of disputes

FORMATION OF PARTNERSHIP

a) Establishment:
Subject to the terms and conditions hereof, the parties hereto agree to carry on the Business in
partnership.

b) Term:
Subject to the provisions of this Agreement, the Partnership shall commence as of the Effective
Date and shall continue for a term ending on the earlier of:

The date on which the Partnership is voluntarily dissolved by unanimous agreement of

the Partners; or
The date on which the Partnership is dissolved by operation of law

c) Name:
The name of the Partnership shall be and/or such other name or names as the Partners may from
time to time agree upon in writing and no party shall carry on business under such name except
as a Partner of the Partnership.

d) Place of Business:
The place of business of the Partnership shall be at such place or places as the Partners shall from
time to time hereafter determine.

e) New Partners:
No person shall be admitted as a Partner except with the unanimous consent in writing of the
Partners.

UNIVERSITY OF CENTRAL PUNJAB

UNIVERSITY OF CENTRAL PUNJAB

DETERMINATION OF PARTNERSHIP
General:
Except as expressly permitted in this Article 5, or as otherwise unanimously agreed to in writing
by the Partners, no Partner may sell, assign, convey, transfer, mortgage, charge or otherwise encumber all
or any part of its share or interest in the Partnership.

Dissolution:
The Partnership shall be dissolved at any time by unanimous resolution of the Partners passed at
a meeting of the Partners called for that purpose. The Partnership may also be terminated by unanimous
agreement in writing signed by all of the Partners.

Determination:
In the event of the dissolution of the Partnership, the Partnership shall terminate and a proper
accounting shall be made of the capital and income accounts of each Partner and the profit or losses of the
Partnership to the date of dissolution by the Accountants. The assets of the Partnership shall be liquidated
and the proceeds of such liquidation shall then be distributed as follows, unless the Partners otherwise
unanimously agree:

firstly, to repay all costs, debts, expenses, liabilities and obligations of the Partnership;
secondly, to pay to each Partner its share of the capital; and
Thirdly, to divide the surplus, if any, between the Partners in the proportions in which
they are entitled to share in profits.

In the event that such liquidation proceeds shall not be sufficient to satisfy the liabilities of the
Partnership, each of the Partners shall contribute its pro rata share, as determined in accordance with their
individual Capital Accounts of the Partnership, of such further funds as shall be necessary to satisfy in
full, the liabilities of the Partnership.

UNIVERSITY OF CENTRAL PUNJAB

RELATIONS OF PARTNERS TO ONE ANOTHER


General Duties of Partners.
Partners are bound to carry on 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 any partner
or his legal representative.

Duty to Indemnify For Loss Caused By Fraud:


Every partner shall indemnify the firm for any loss caused to it by his
fraud in the conduct of the business of the firm.

Determination of Rights and Duties of Partners By


Contract Between The Partners:
Subject to the provisions of this Act, the mutual rights and duties of the
partners of a firm may be determined by contract between the partners,
and such contract may be expressed or may be implied by a course of
dealing. Such contract may be varied by consent of all the partners, and
such consent may be express or may be implied by a course of dealing.

Agreements in Restraint Of Trade:


Notwithstanding anything contained in section 27 of the Contract Act,
1872 such contracts may provide that a partner shall not carry on any
business other than that of the firm while he is a partner

The conduct of the business:


Every partner has a right to take part in the conduct of the
business;
Every partner is bound to attend diligently to his duties in
the conduct of the business;

UNIVERSITY OF CENTRAL PUNJAB

Any difference arising as to ordinary matters connected with the


business may be decided by a majority of the partners, and every
partner shall have the right to express his opinion before the matter
is decided, but no change may be made in the nature of the
business without the consent of all the partners
Every partner has a right to have access and to inspect and copy
any of the books of the firm.

MUTUAL RIGHTS AND LIABILITIES


Subject to contract between the partners
A partner is not entitled to receive remuneration for taking part in
the conduct of the Business;
The partners are entitled to share equally in the profits earned, and
shall contribute equally to the losses sustained by the firm;
Where a partner is entitled to interest on the capital subscribed by
him, such interest shall be payable only out of profits;
A partner making, for the purposes of the business, any payment or
advance beyond the amount of capital he has agreed to subscribe,
is entitled to interest thereon at the rate of six per cent per annum;
the firm shall indemnify a partner in respect of payments
made and liabilities incurred by him
(i) In the ordinary and proper conduct of the business, and
(ii) In doing such act, in an emergency, for the purpose of protecting the
firm from loss, as would be done by a person of ordinary prudence, in his
own case, under similar circumstances; and
A partner shall indemnify the firm for any loss caused to it by his
willful neglect in the conduct of the business of the firm

UNIVERSITY OF CENTRAL PUNJAB

RIGHTS AND DUTIES OF PARTNERS AFTER A


CHANGE IN THE FIRM
where a change occurs in the constitutions of a firm, the mutual
rights and duties of the partners in the reconstituted firm remain
the same as they were immediately before the change as far as may
be;
Where a firm constituted for a fixed term continues to carry on
business after the expiry of that term, the mutual rights and duties
of the partners remain the same as they were before the expiry, so
far as they may be consistent with the incidents of partnership-atwill
Where a firm constituted to carry out one or more adventures or
undertakings carries out other adventures or undertakings, the
mutual rights and duties of the partners in respect of the other
adventures or undertakings are the same as those in respect of the
original adventures or undertakings

RIGHTS OF PARTNER
Right to Manage Business:
Every partner has right to take part in the management of business.
Right to express opinions:
Every partner has right to express his opinions relation to business matters.
Right to access the accounts books.
Every partner has right to access the account books of firm.
Right to share the profit:
Every partner has right to share the profit of the business.
Right to interest on capital:
Every partner can charge interest on capital contributed by him.
Right to interest on advances:
Every partner has right to interest on advances at the of 6% per annum.

UNIVERSITY OF CENTRAL PUNJAB

Right to be indemnified:
Every partner has right to be indemnified by the firm in respect of payment by him.
Case law
P. L. D 1958 Kar 251
any partner obtaining credit on his own behalf cannot bind other partners and they are not liable.
Partners authority in emergency:
Partner has right to act in emergency to protect the firm from loss.
Conditions
(i) there must be an emergency.
(ii) The act must be done for the purpose of protecting the firm from loss.
(iii) The act must be such as a person of ordinary prudence, would have done in his own case
acting under similar circumstances.
Right to give consent for new partner:
Every partner has right to prevent the introduction of a new partner unless he consents to that.
Right to retire:
Every partner has right to retire from the firm.
Right not to be expelled:
A partner cannot be expelled from firm by any majority of partners provided the decision is made
in good faith and there is a provision in contract.
Right to carry on competing business:
Every outgoing partner has a right to carry on a business similar to that of the firm subject to
certain restrictions.
Right of dissolution of firm:
Every partner has right to file suit for dissolution of firm.
Right to restrain from use of firm name or firm property:
Every partner has the right to see that the property of the firm is used only for the purpose of
partnership.
Right of the partner who leaves the firm due to any reason is entitled to claim any share
according to the agreement.

UNIVERSITY OF CENTRAL PUNJAB

DUTIES OF PARTNERS
I.

Duty to carry on business:


Every partner is bound to carry on the business of the firm to common
advantage.

II.

Duty to maintain true accounts:


Every partner must render true and proper account to his co-partner.

III.

Duty to keep secrecy:


It is duty of every partner that he should maintain the secrecy for the
business.

IV.

Duty to provide information:


Every partner should provide all the necessary information about the
business to co-partners.

V.

Duty to compensate:
It is duty of every partner to compensate any loss incurred by him.

VI.

Duty to abide by the decisions:


Every partner should abide by the decision taken by the majority of the
partners.

VII.

Duty to share the loss:


Every partner shall bear the loss equally borne by the firm irrespective
of their capital contribution.

VIII.

IX.

Duty not to use firm property for his own.


It is the duty of every partner of the firm to hold and use the
property of the firm only for the purpose of business.
Sincere and faithful:
Every partner should be just and faithful to the other partners.
UNIVERSITY OF CENTRAL PUNJAB

X.

Duty to indemnify for willful neglect:


Every partner shall indemnify the firm for any loss caused to it by his
willful neglect in the conducted of business of firm.

XI.

Duty not to carry other business.


It is the duty of a partner not to carry other business.

XII.

Duty to pay profit to firm:


If a partner earns profit from any source of the firm it should be paid to
firm.

XIII.

Duty to be liable jointly and severally:


Every partner is liable jointly and severally for all the acts of the firm.

XIV.

Duty not to transfer his rights:


A partner cannot transfer his rights and interest in the firm to an
outsider to make him partner in the business without the consent of
others partners

UNIVERSITY OF CENTRAL PUNJAB

RELATION OF PARTNER WITH THIRD PARTY

Mutual agency refers to the relationship of


Principal and agent among partners

Example in case of

When A acts

When B acts

When C acts

A- Agent

B- Agent

C- Agent

B and C-

A and C-

A and B-

UNIVERSITY OF CENTRAL PUNJAB

RELATIONS OF PARTNERS TO THIRD PARTIES


Partner to be agent of the firm:
Subject to the provisions of this Act a partner is the agent of the
firm for the purposes of the business of the firm

Implied authority of partner as agent of the firm:


Subject to the provisions of section 22, the act of a partner which
is done to carry on, in the usual way, business of the kind carried
on by the firm, binds the firm.
The authority of a partner to bind the firm conferred by this section
is called his "implied authority".
In the absence of any usage or custom of trade to the contrary, the implied
authority of a partner does not empower him to

Submit a dispute relating to the business of the firm to

arbitration.
Open a banking account on behalf of the firm in his own

name,
Compromise or relinquish any claim or portion of a claim

by the firm,
Withdraw a suit or proceeding filed on behalf of the firm,
Admit any liability in a suit or proceeding against the firm,
Acquire immovable property on behalf of the firm,
Transfer immovable property belonging to the firm, or
Enter into partnership on behalf of the firm

PARTNER OBLIGATIONS

UNIVERSITY OF CENTRAL PUNJAB

Law firms continue to struggle in order to define the obligations of partners. A partner is not
fulfilling his or her obligations as an owner of the business if he or she does not meet all the
minimum requirements.
I hope that you will be able to use these suggestions in thinking about your partnerships, how
they operate and how individual partners contribute.
In my opinion, partners in law firms have to act like true owners in a business and should be
concerned with production, sales, management and profitability.
Client-Determined Service Quality: This means that clients, prospective clients and internal
clients (other partners) must receive the level of attention, treatment, timely service, etc., that
they expect from every partner.

A. Practice Development:
Every partner should energetically participate in practice development efforts for ones self and
for or with others.
There are things that any lawyer can do to help develop the firms practice. Not everyone should
aspire to becoming a traditional rainmaker. However, there must be ongoing efforts in practice
development by all owners in order to increase or maintain business.
Strategies such as writing to demonstrate competency, speaking and effective networking, crossselling and similar activities are still effective means of practice development.

B. Management Contribution:
Every partner has an obligation to participate in (some portion of) management to ensure the
effective, efficient running of the professional and business sides of the practice.
Law firms increasingly have management needs that did not exist ten years ago. Some of these
needs are ongoing, such as those of a practice leader, others are ad hoc, such as someone
assigned to evaluate the firms insurance plan

UNIVERSITY OF CENTRAL PUNJAB

C. Skill and Knowledge Transfer:


Every partner should, through formal and informal means (mentoring, CLE, briefing/debriefing,
training, programs, etc.) participate in the development of younger attorneys into effective
practitioners.
The transfer of knowledge and know-how regarding technical and practical law practice is
poorly attended to in many law firms. This increasingly frustrates younger lawyers, resulting in
lawyers who do not gain skill as rapidly as they should and, therefore, are not as valuable
(economically) in the marketplace.
A trend among (some) corporate counsel, is not to allow law firms to use young associates,
because these associates are not perceived to add value. The faster the skills of new lawyers can
be built, the quicker the market will recognize the associates value.

D. Personal Economic Contribution:


Each owner should seek to produce working attorney revenue, on a yearly basis, in an amount
that would cover his or her compensation plus allocated overhead and an added profit factor.
At a time when leverage in law firms is increasingly difficult to achieve, when there is immense
pressure on hours, rates and realization, it is necessary for all lawyers to be economically viable
(from a productive perspective). The objective is for each owner to meet the economic threshold
and participate in the profits available from other sources in the firm, i.e., associates, paralegals
and other partners.
As a practical manner, not every owner will be a break-even by the numbers. This may be
satisfactory for a select number of partner as long as that attorney is deemed (by the firm) to add
value in other ways. Ideally, these other ways can and should be quantified. However, there
may be instances and for the sake of the firms profitability relatively few instances where a
partners qualitative contributions may be acknowledged by lawyer management and a
significant majority of partners in terms of their contribution to the firm. However, absent
clearly adding value in other ways, an owner must be economically viable by the numbers.

UNIVERSITY OF CENTRAL PUNJAB

UNIVERSITY OF CENTRAL PUNJAB

DISSOLUTION OF PARTNERSHIP
When the business of the firm is closed down and the relation of partners comes to an end, the
firm is said to have been dissolved. There is a distinction between the dissolution of partnership
and dissolution of firm.
When one or more partners sever their connections with the firm but the remaining partners
continue to carry on business, it is the dissolution of partnership. But when there is a complete
breakdown of relations among all the partners and the business is closed down, it is termed as
dissolution of the firm, in this chapter; we shall deal with accounts of the relationship when the
firm is dissolved

CIRCUMSTANCES OF DISSOLUTION:

The dissolution of partnership takes place under the following circumstances.


When the firm was constituted for a fixed term, on the expiry of that term.
On the completion of particular venture, if constituted for a purpose.
On the death of a partner.
On the insolvency of a partner.
On the retirement of a partner.
o A firm is dissolved under the following circumstances:
When all the partners agree to dissolve the firm.
When all the partners of all partners except one are declared insolvent.
When all business of the firm becomes unlawful.
When the partnership is at will, on any partner giving notice in writing to all the other

partners of his intention to dissolve the firm.


When the court orders the dissolution of the firm.

Under the following circumstances, the court will order the dissolution of the firm.
When a partner becomes of unsound mind.
When a partner has become permanently incapable of performing duties
When a partner is guilty of misconduct which is likely to affect business.
When a partner persistently commits breach of partnership agreement
When a partner has transferred whole of his interest in the firm to a third party
When the business cannot be carried on except at a loss.
UNIVERSITY OF CENTRAL PUNJAB

On any other ground which appears to the court just and equitable

STEPS TO BE TAKEN ON DISSOLUTION:


The above provisions of the partnership Act suggest the following steps to be taken on

dissolution of the firm.


All the assets of the firm, including goodwill are sold or disposed of in any other way

(E.g. a partner may take over an asset)


The amount so realized is applied in paying off third party liabilities in the first balance.
If any one or more partners have advanced loan to the firm in addition to his capital, then

these loan are repaid next after repayment of third party liabilities.
Now, partners will be paid what is due to them on capital accounts. If the surplus is not

enough to return the full amount of capital, then the partner are paid ratably
Surplus, if any, left after returning capitals is paid to the partners in their profit sharing
ratio

UNIVERSITY OF CENTRAL PUNJAB

BIBLOGRAPHY
http://biztaxlaw.about.com/od/startingapartnership/f/partneragree.htm
http://www.tahseenbutt.com/business_formation_pakistan.html
http://www.scribd.com/doc/31412139/Partnership-in-Pakistan
http://www.joelarose.com/articles/defining_partner_obligations.html

UNIVERSITY OF CENTRAL PUNJAB

Вам также может понравиться