Discuss Fully the Position of a Minor in a Partnership Firm.
Partnership is an agreement and to be valid it must fulfill all the requirements of a valid contract. One of those requirements is competence of parties and, therefore, it follows that a minor can not enter into an agreement of Partnership. But, however, Section 30 of the Partnership Act provides that a minor can be admitted as a partner with the consent of all the partners for the benefit of the partnership firm.
Thus there must be at least two major partners before a minor is admitted into the benefits of partnership. Right of Minor. When a minor is admitted to the benefits of a partnership, his rights and liabilities before attaining majority are as follows:
- Right to share profits: A minor admitted to benefits of partnership has a right to receive his agreed share of the property and of the profits of the firm.
- Right to access to books of account: He has a right of access to accounts and to inspect and copy any of the accounts of the firm. However, this right is available for accounts only and not other books of the firm. Which may contain secrets for which minor can not be trusted.
- Suit for share: A minor may sue the partners for an account or payment of his share of profits or property of the firm on leaving the firm. As long as he remains in the firm, he has no such right. if he wants to sue he should first leave the firm.
- Liability of Minor: Minor’s share is liable for the acts of the firm but the minor is not personally liable for any such act. A minor being entitled to the benefits, it would be just and equitable that his share in the partnership assets should be held liable.
Position of Minor on Attaining Majority:
On attaining majority or knowing that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm, ‘provided that if he fails to give such notice, he shall become a partner in the firm on the expiry of the said six months’.
When such person elects to become a partner
- He becomes personally liable to”third parties for all acts of the firm retrospectively, i.e., from the date of his admission to the benefits of partnership as a minor.
- His share in the property and profits of the firm shall be the share to , which he was entitled as a minor.
Rights and liabilities where he elects not to become a partner
- His rights and liabilities shall continue to be those of a minor up to the date on which he gives a public notice.
- His share shall not be liable for any acts of the firm: done after the date of the notice.
- He shall be entitled to sue the partners for his share of the profits and property.