Relations of Partners to One Another: Jaiib/DBF Paper 3 (Module D) Unit-11
As we all know that is Relations of Partners to One Another for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are Relations of Partners to One Another (Unit-11), Commercial Laws with Reference to Banking Operations (Module D), Legal & Regulatory Aspects of Banking -Paper 3.
♦General Duties of Partners
- The partners should not make secret profits. They have to be just and faithful to each other. They must render true accounts of the business and full information of all things affecting the firm to all the partners or their legal representatives.
♦ Duty to Indemnify the loss caused by Fraud
- Every partner is bound to indemnify the firm for any loss caused to the partnership firm by his fraud, in the conduct of the business of the firm.
♦Determination of Rights and Duties of Partners by Contract between the Partners
- The partners of a firm can decide their mutual rights and duties and change them from time to time with the consent of all the partners. This may be implied (i.e. understood by the dealings between them/ with outsiders) or may be expressed (i.e. specifically discussed and made clear). These should however, be not against the provisions of the Partnership Act.
♦The CONDUCT OF THE BUSINESS
Subject to a contract between the partners (i.e. the agreement and understanding arrived between themselves)
- 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;
- Any difference arising as to ordinary matters connected with the business can be decided by a majority of the partners and every partner has a right to express his opinion before the matter is decided. However, no change can be made in the nature of the business without the consent of all the partners.
- Every partner has a right to have access to and to inspect and copy any of the books of the firm.
♦Mutual Rights And Liabilities
Subject to a contract between the partners (i.e., the agreement and understanding arrived between themselves),
- 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 liable to contribute equally to the losses made by the firm;
- Where a partner is entitled to interest on the capital subscribed by him such interest is to be paid only out of profits of the firm;
- Interest at 6 per cent on extra amount paid by the partner;
- The firm has to indemnify a partner in respect of payments made and liabilities incurred by him:
- In the ordinary and proper conduct of the business, and
- In doing such act in an emergency, for the purpose of protecting the firm from loss;
- Similarly, a partner has to indemnify the firm for any loss caused to it by his wilful neglect in the conduct of the business of the firm.
♦Right and Duties of Partners
- After a change in the partner 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.
- Similarly, after the expiry of the term of the firm, if a firm constituted for a fixed term, continues to carry on business, the mutual right and duties of the partners remain the same as they were before the expiry.
- Mutual rights and duties remain same for additional undertaking/adventure carried out.
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