The Indian Partnership Act

Minors Admitted to Benefits of Partnership

As we have seen in the Contract Act, minors cannot be a party to a contract. A contract involving a minor is void-ab-initio. However, the Partnership Act has its own sets of legal rules regarding minors. So let us study about minor partner and the benefits they gain from a partnership.

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Minors Admitted to Benefits of Partnership

Section 30 of the Indian Partnership Act 1932 contains legal provisions about a minor in a partnership. Now we know the Indian Contract Act 1857 clearly states that no person less than the age of 18, i.e. a minor can be a party to a contract. And a partnership is a contract between the partners. Hence a minor cannot be a partner in a partnership firm.

However, according to the Partnership Act, a minor may be admitted to the benefits of a partnership. So while the minor will not be a partner he will enjoy all the benefits of a partnership. To admit all the minor to the benefits of the partnership all of the partners of the firm must be in agreement.

Partnership: Minor Partner

Rights of a Minor Partner

Once the minor is given the benefits in a partnership there are certain rights that he enjoys. Let us take a look at the rights of a minor partner.

  1. A minor partner will obviously have the right to his share of the profits of the firm. But the minor partner is not liable for any losses beyond his interests in the firm. So a minor partner’s personal assets cannot be liquidated to pay the firms liabilities.
  2. He can also like any other partner inspect the books of accounts of the firm. He can demand a copy of the books as well.
  3. If necessary he can sue any or all of the other partners for his share of the profits or benefits.
  4. A minor partner on attaining majority has the right to become a partner of the firm. He has six months from attaining majority to decide if he will execute this right. Whether he decides to become a partner or not he must give public notice about the same.

Liabilities of a Minor Partner

  1. A minor cannot be held personally liable for the losses of the firm. And if the firm declares insolvency the minor’s share is kept with the Official Receiver
  2. After turning 18 the minor partner can choose to become a partner of the firm. But he may choose to not become a partner. In this case, the minor partner has to give a public notice about this decision. And the notice has to be given within 6 months of gaining a majority. If such a notice is not given even after 6 months then the minor partner will become liable for all acts done by the other partners till the date of such notice.
  3. Should the minor partner choose to become a partner he will be liable to all the third parties for the acts done by any and all partners since he was admitted to the benefits of the partnership.
  4. If he becomes a full-time partner he will be treated as a normal partner and have all the liabilities of one. His share in the profits and property of the firm will remain the same as it was when he was a minor partner.

Solved Question for You

Q: A minor will automatically become a full-time partner on becoming 18. True or False?

Ans: This statement is False. When a minor attains majority it will be his choice whether to become a full-time partner or retire from the firm. Once he makes his choice he must give a public notice declaring the same.

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