RIGHTS OF THE PARTNERS
Various rights and duties contained in Sections 12 to 17 are “subject to contract between partners”:
1. Section 12(a) – Right to take part in conduct of business.
2. Section 12(c) – Right to express opinion
Any difference arising as to ordinary matters connected with the business may be decided by the majority of the partners, and every partner shall have the right to express his opinion before the matter is decided, but no change may be made in nature of business without the consent of all the partners.
The difference of opinion may be either
(i) as to ordinary matters connected with the business or
(ii) matters of fundamental importance.
When the difference of opinion pertains to ordinary matter connected with the business the same may be resolved by a decision of the majority of the partners. But before the matter is decided every partner must be provided with an opportunity to express his opinion. When the matter is of fundamental importance consent of all the partners is needed e.g. admission of a new partner or a change in nature of business.
3. Section 12(d) – Right to have access to books of the firm
4. Section 13 (b) – Right to share profits
Generally, the partners provide in their agreements as to what will be the proportion in which they will share the profits e.g. ½, ¼, ¼.
However, Section 13(b) lays down that in the absence of any such agreement, the partners are to share the profits equally and also to contribute equally to the losses sustained by the firm and not in proposition in which various partners contribute capital.
Section 13(a) – It lays down that a partner is not entitled to receive any remuneration for taking part in the conduct of business unless otherwise agreed.
5. Section 13(c) and (d) – Right to interest or capital and advances
If the partners agree that interest on capital is to be given, then according to Section 13(c) such interest shall be payable only out of profits.
Similarly, if the partner makes any payment or advance beyond the amount of capital he has agreed to subscribe, he is entitled to interest thereupon at rate of 6% per annum according to Section 13(d).
6. Section 13(e) – Right to indemnity – A partner while acting on behalf of the firm may make certain payments and also incur some liabilities.
According to Section 13(e), he is entitled to claim indemnity for the same.