A partner has unlimited personal liability in a partnership firm. The liabilities of partners are unlimited in all firm contracts. They are jointly and severally liable for all torts committed by one of the partners or by a firm employee within the scope of the partnership’s business.
Liability of Partner to Share Losses
Each partner has to share, the losses of the firm in the ratio of profit sharing.
Compensation for Loss due to Mistake
a partner knowingly commits a mistake, and this causes loss to the firm, then that partner has to compensate for such loss.
Prohibition to Use Firm’s Property for Private Use
It is the duty of each partner, not to use the firm’s property for personal use.
Participation in Business Without Remuneration
It is the duty of each partner to participate, with full sincerity and effort, in the running and management of the partnership firm without the expectation of remuneration.
To Work Within the Rightful Limits
It is the duty of each partner to perform the activities of the firm within his own rightful limits.
Not to Delegate his Rights to Others
It is the duty and responsibility of each partner not to delegate his rights and benefits of partnership to any other person.
Accountability for Private Profits
If any partner has earned a personal profit through any transaction of the firm, or by the firm’s property or by using the firm’s name, then it becomes the duty of that partner to show the accounts of this profit and give such profit to the firm.
Accountability of Profit from Competitive Business
If any partner runs a competitive business and deals in the business of similar goods, then he should give a full account of all profits from such business, to the firm.
Duties in Business After a Fixed Period of Time
If a partnership firm is established for a fixed period of time, but even after the expiry of such a period, it continues its fünctions, then the duties and liabilities of partners remain the same, as before.
1 thought on “Duties, Obligations and Liabilities of Partners”
Pingback: Partnership : Definition and Its Characteristics - Exam Notes