Relations of Partners to One Another: Mutual Rights and Liabilities of partners in Banking

The relations of partners to one another are governed by the Indian Partnership Act, 1932. The Act sets out the mutual rights and liabilities of partners, including the following:

  • Right to share profits: Partners are entitled to share the profits of the partnership in the agreed ratio. If there is no agreed ratio, the profits are shared equally.
  • Right to participate in management: Partners have the right to participate in the management of the partnership. This right is not absolute, and the partnership agreement may restrict the right of some partners to participate in management.
  • Right to information: Partners have the right to be kept informed about the affairs of the partnership. This right includes the right to inspect the books and records of the partnership.
  • Right to indemnity: Partners are entitled to be indemnified by the partnership for losses that they suffer as a result of their involvement in the partnership business.
  • Right to sue for dissolution: Partners have the right to sue for the dissolution of the partnership if the other partners are not fulfilling their obligations under the partnership agreement.
  • Liability for debts and obligations: Partners are jointly and severally liable for the debts and obligations of the partnership. This means that all of the partners are liable for the full amount of the debt, even if only one partner is responsible for it.

Here are some MCQs on the relations of partners to one another: mutual rights and liabilities of partners in banking:

  1. Which of the following is a right of a partner in a banking partnership?
    • Right to share profits.
    • Right to participate in management.
    • Right to information.
    • All of the above.
    • The answer is (d). All of the above are rights of a partner in a banking partnership.
  2. A partner in a banking partnership is not allowed to participate in management. Is this valid?
    • Yes, this is valid.
    • No, this is not valid.
    • The answer is (b). This is not valid. A partner in a banking partnership has the right to participate in management, unless the partnership agreement specifically excludes this right.
  3. A partner in a banking partnership is sued for the debts of the partnership. Can the partner claim indemnity from the other partners?
    • Yes, the partner can claim indemnity from the other partners.
    • No, the partner cannot claim indemnity from the other partners.
    • The answer is (a). A partner in a banking partnership can claim indemnity from the other partners for the debts of the partnership.