Rights of Partner in a Partnership Firm

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Rights of PartnerA partnership is a voluntary organization of two or more persons who agree to earn profits from a lawful business and share it among themselves. The persons who participate in this business are individually called ‘Partners’ and cumulatively called a ‘Firm’. The name in which the business is carried on is called ‘the name of the firm’.

The partner who has invested more in partnership business and directly involves in business activities is called an active partner. The partners who have invested money but involve in business activity is called sleeping partner. The partner who has invested money but nominated as a partner is called a nominal partner. The partner who is retired from the business but investment is not written is called quasi-partner.

A partnership firm is different from a Sole Proprietorship in terms of the rights of a partner.

Rights of Partner

  1. Rights of Partner of Participation in Business

    Each partner has the full right to participate in the business.

  2. Rights of Partner to Receive Profits

    Each partner has an equal right to receive profits.

  3. Right to Access Books of Accounts

    Each partner’ has the right to reach, inspect, or make copies of any portion of books of account of the firm.

  4. Right to Vote

    If there arises a difference of opinion in any matter related to the partnership, then it is resolved through a majority vote. Butt before the resolution each partner has the right to give his opinion.

  5. Interest on Capital

    In the absence of a prior agreement, no partner has the right to receive interest on capital.

  6. Right to Receive Interest or additional Capital and Loan

    If any partner has invested additional capital in the firm or provided a loan then he has the right to receive interest on capital and loan.

  7. Right to Start Competitive Business

    Each partner who has separated himself from the firm except the provisions under Sec. 36 (i), has the right to start a competitive business. But he does not have the right to use the firm’s name, to show himself as the firm’s representative, or to divert the customers of the firm.

  8. Equal Right in the Firm’s Property

    Each partner has equal rights in the proper•y of the firm. The firm’s property can be used only for the purpose of business, and not for private use.

  9. Right to Receive Compensation from Firm

    If a partner, in time of distress, performs such an act to save the firm from loss, which an ordinary person of equal intelligence would do in similar circumstances for himself, and in this context if he makes any payment or accepts some liabilities, then he has the right to receive compensation from the firm.

  10. Right to Leave the Firm

    Under voluntary partnership, any partner can separate himself from the firm, only after giving a notice. In other Cases, no partner can separate himself from the firm without the prior permission of other partners.

  11. Right of not to be Expelled from the Firm

    A partner cannot be expelled from the firm. But if all the partners, with good faith and on majority voting, decide to expel any partner, then he can be expelled.

  12. Right to the Share of Profit by the Expelled Partner

    If a person dies, or he is expelled from the firm, and settlement of his account is not done, then he has the right to receive his share of profit and interest on the balance payment.

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