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2.  Definition of Partnership
 Types of Partners
 Rights of a Partners
 Liability of Partners to Third Parties

3. As defined by Partnership Act 1932:
The relation between the persons who have agreed to share
the profits of the business carried on by all or any one of them
acting for all.

5.  A person who takes active interest in the
conduct and management of the
business of the firm is known as active or
managing partner.
 He carries on business on behalf of the
other partners. If he wants to retire, he
has to give a public notice of his
retirement; otherwise he will continue to
be liable for the acts of the firm

6.  A sleeping partner is a partner who ‘sleeps’,
that is, he does not take active part in the
management of the business. Such a
partner only contributes to the share capital
of the firm, is bound by the activities of
other partners, and shares the profits and
losses of the business. A sleeping partner,
unlike an active partner, is not required to
give a public notice of his retirement. As
such, he will not be liable to third parties for
the acts done after his retirement.

7.  A nominal partner is one who does not
have any real interest in the business but
lends his name to the firm, without any
capital contributions, and doesn’t share
the profits of the business. He also does
not usually have a voice in the
management of the business of the firm,
but he is liable to outsiders as an actual
partner.

8. When a partner agrees with the others
that he would only share the profits of
the firm and would not be liable for its
losses, he is in own as partner in profits
only.

9.  A sub-partner is one who shares the
profits of another partner. When a
partner agrees to share his profits in a
firm with a third person, that third person
is called a sub-partner. A sub-partner is
not a partner in the original firm.

10.  A partner by estoppel is one who
represent himself to be a partner in the
firm but in reality he is not so. This kind of
partner is not real partner of the firm but
by words spoken or written or by
conduct, represents him or knowingly
permits him to be represented to be a
partner in a firm.

11.  Right to take part in the conduct of the
business
 Right to be consulted
 Right to access the books
 Right to share profits
 Right to interest on capital
 Right to interest on advances
 Right to indemnity

12.  Right to take part in the conduct of the
business :- Every partner has a right to
take part in the conduct of the business.
 Right to be consulted :-
 Right to access the books :- Every
partner has a right to have access to
and to inspect and copy any of the
books of the firm.

13.  Right to share profits :- The partners are
entitled to share equally in the profits
earned and shall contribute equally to the
loss sustained by the firm.
 Right to interest on capital :- Where a
partner is entitled to interest on the capital
subscribed by him such interest be payable
only out of profits. In the absence of an
agreement no partner is entitled to any
interest on capital invested by him in the
firm.

14.  Right to interest on advances :- A partner
making for the purpose of the business
any payment of advance beyond the
amount of capital he has agreed to
subscribe is entitled to interest thereon at
the rate of 6%.
 Right to indemnify :- The firm is required
to indemnify a partner in respect of
payment made and liabilities incurred by
him.

15.  Liability of a partner for acts of the firm
 Liability of the firm for wrongful acts of a
partner
 Liability of the firm for misapplication by
partners

16.  Every partner is jointly and severally
liable for all acts of the firm done while
he is a partner. Because of this liability,
the creditor of the firm can sue all the
partners jointly or individually.

17.  If any loss or injury is caused to any third
party or any penalty is imposed because
of wrongful act or omission of a partner,
the firm is liable to the same extent as
the partner. However, the partner must
act in the ordinary course of business of
the firm or with authority of his partners.

18.  Where a partner acting within his
apparent authority receives money or
property from a third party and misutilises
it or a firm receives money or property
from a third party in the course of its
business and any of the partners
misutilises such money or property, then
the firm is liable to make good the loss.