General Partnership Liabilities.A general partnership is a type of business structure in which two or more individuals share the ownership, management, and profits of a business. In a general partnership, each partner is jointly and severally liable for the debts and obligations of the partnership. This means that each partner is personally responsible for the entire debt, not just a portion of it.
General Partnership Liabilities You Must Know.
Some of the liabilities that can arise in a general partnership include:
- Contractual liabilities: If the partnership enters into a contract with a third party, each partner is jointly and severally liable for fulfilling the terms of the contract.
- Tort liabilities: If the partnership is sued for negligence or other torts, each partner is jointly and severally liable for any damages awarded to the plaintiff.
- Tax liabilities: Partners are responsible for paying their share of the partnership’s taxes on their personal tax returns.
- Debts and obligations: Each partner is responsible for the partnership’s debts and obligations, including loans, leases, and other financial obligations.
It’s important for partners in a general partnership to understand the potential liabilities they may face and to take steps to mitigate them. For example, partners can draft a partnership agreement that outlines each partner’s responsibilities and limits their liability. Additionally, partners can purchase liability insurance to protect themselves and the partnership from financial losses.
RIGHTS DUTIES AND LIABILITIES PARTNERS
Partnership agreement includes the rights and duties of every partner. The rights and duties are decided by partners in agreement. In the absence of agreements, partnership Act decides the rights and duties of partners.
General Partnership Liabilities And Rights Of Partner.
Following are the main rights of partners according to Partnership Act 1932.
Right to take part in management
Every partner has right to take part in the management of the partnership business.
Right to receive profit
Every partner has right to share profit of business according to agreement. In the absence of an agreement profits is distributed equally.
Right to receive interest on loan
Every partner has right to receive interest on loan. Which is provided by him to business.
Right to receive interest on capital
A partner has right to receive interest at the rate of 6% per annum according to agreement.
Right of consultation
A partner has right to express his opinion in all business matters. All decisions must be with the consent of all partners. No change may be made in the nature of business without consent of all partners.
Right to use property
Every’ partner has the right to use the business property. The business property must be used for the purpose of business.
Right to check books
Every partner has a right to check and copy the books of account in Partnership business.
Right to continue
A partner has a right to continue in the partnership business. He cannot be expelled without any solid reason from partnership business.
Right of compensation
A partner has a right to be compensated by the partners in respect of expenses incurred by him or any losses suffered by him in the conduct of his business.
Right to use emergency powers
A partner has..power to act in an emergency powers for protecting the business from loss. He is responsible for any loss caused due to his any wrong decisions.
DUTIES OF PARTNERS
The duties are described in section 9.10,12,13 of partnership Act are written below:
Common advantage . *
It is the duty of every partner to carry on business to the common advantage not for personal advantage. Partners are bound to carry on the business to the greatest common advantage.
Sincere
Every partner must be sincere with other partners for the best interest of business.
Keep the accounts
A partner is bound to keep and prepare correct accounts of business. Every partner shall work honestly and carefully to his duties of business.
Provide full information
Every partner is an agent of other partner so he is responsible to provide hill information of business to all partners
Compensation for fraud
Every partner is responsible to compensate for any loss caused by his fraud in business.
Compensation for neglect
Every partner is responsible for any loss caused due to his willful neglecting business.
Share losses
Every partner is responsible to share losses of business according to agreement.
Work without remuneration
Every partner is responsible to work hard without any remuneration in absence of ajri agreement.
Use property
The property of the business must be used for the common benefit of all partners.
Act within powers
Every partner is bound to act within his powers. He should not be exceeding his authorities in business.
Liabilities of partners
Following are the main liabilities of partners in partnership business. .
Joint liability
Every partner is responsible to carry on business so every partner is jointly responsible for the business Ioans and losses.
Liability of new partner
A new partner cannot be held responsible for the loss, before the date of his admission in partnership
Liability of retiring partner
Retiring partner is not responsible for any loss after his retirement from partnership business.
Liability of Insqlvent partner
The partnership business is not responsible for any liabilities of insolvent partner after the date of which the order of insolvency made by court
