Determination of Rights and Duties of Partners by Contract between the Partners

The rights and duties of partners can be determined by a contract between the partners. This contract is called the partnership agreement.

The partnership agreement can be oral or written. However, it is advisable to have a written partnership agreement, as this will provide a clear record of the terms of the partnership.

The partnership agreement can contain any terms that the partners agree upon. However, there are some terms that are implied by law into every partnership agreement. These terms are:

  • The duty of good faith: Partners must act in good faith towards each other and towards the partnership.
  • The duty of loyalty: Partners must not compete with the partnership.
  • The duty to account: Partners must account to each other for all money and property belonging to the partnership.
  • The duty to indemnify: Partners must indemnify the partnership for losses that are caused by their negligence or misconduct.

The partnership agreement can also modify or exclude these implied terms.

Here are some MCQs on the determination of rights and duties of partners by contract between the partners:

  1. Can the partners agree to change the implied terms of a partnership?
    • Yes, the partners can agree to change the implied terms of a partnership.
    • No, the partners cannot change the implied terms of a partnership.
    • The answer is (a). The partners can agree to change the implied terms of a partnership, but only if all of the partners agree to the change.
  2. Can the partnership agreement be oral?
    • Yes, the partnership agreement can be oral.
    • No, the partnership agreement must be written.
    • The answer is (a). The partnership agreement can be oral, but it is advisable to have a written partnership agreement.
  3. What happens if there is no partnership agreement?
    • The implied terms of the partnership will apply.
    • The partnership will not be valid.
    • The partners will have to go to court to determine their rights and duties.
    • The answer is (a). If there is no partnership agreement, the implied terms of the partnership will apply.