INCOMING PARTNERS
Section 31:
- Subject to contract between the partners and to the provision of Section 30, no person shall be introduced as a partner into a firm without the consent of all the existing partners.
- Subject to provisions of Section 30, a person who is introduced as a partner into a firm does not thereby become liable for any act of the firm done before he become a partner.
A new partner can be introduced in following ways:
a) With the consent of all existing partners.
b) In accordance with contract between the partners.
If a contract between the partners permits the introduction of a new partner even without the consent of all the existing partners that can possibly be done. In such cases, even if some of the partners are unwilling to introduction of some particular person they will be bound by contract and the introduction will be valid.
Cases:
i) Lovergrove v. Nelson
ii) Byrne v. Reid – The agreement between the partners to admit son of one of the partners when he attains the age of 21 is valid agreement and son on accepting the nomination becomes a partner.
Thus, a person does not become a partner merely by his nomination. He has an option to become a partner or not (Pigott v. Bagley). He becomes a partner when after nomination he expressly or impliedly agreed to the same (Mool Chand v. Manekchand).
c) In accordance with provision of Section 30
A minor admitted to the benefits of partnership can become a partner according to procedure mentioned in Section 30(5). When a minor is admitted to the benefits of partnership he may make an option within six months of his attaining the majority or obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later and give a public notice whether he become a partner or not. If he fails to give such a notice within the above stated time, then on expiry of such time, he automatically becomes a partner. In case of such a minor becoming a partner, the consent of other partner is not required.
Section 31(2): Liability of an incoming partner
Section 25 states that “every partner is liable for all the acts of the firm done while he is a partner”. This sub-section confirms this rule and states that incoming partner “does not become liable for any act of firm done before he become a partner”. Thus, liability of an incoming partner begins from his date of joining the firm. On the other hand liability of a minor toward third parties does not commence from the date of his becoming a partner but from the date of his admission to the benefits of partnership. [Section 30(7) (a)]
Nothing can however prevent a partner from agreeing to be liable for the acts done before his admission. The basis of liability for past act in such a case will be agreement rather than the fact of his admission as a partner.
