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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

A firm was formed for five years. After the term expired, the partners continued the business without any new agreement. As per Section 17 of the Indian Partnership Act, 1932, subject to contract between the partners, their mutual rights and duties:

The mutual rights and duties remain the same as before the term expired, so far as they are consistent with the incidents of partnership at will. Section 17(b) applies this subject to any contract between the partners, so no court order or fresh fixing is needed.

  1. AEnd immediately and must be fixed afresh by the court
  2. BRemain the same as before expiry, so far as consistent with the incidents of partnership at willCorrect
  3. CPass to the Registrar of Firms until a new deed is made
  4. DBecome equal in all respects, ignoring the earlier profit-sharing

Explanation

Section 17(b) states that where a firm for a fixed term continues after expiry, the mutual rights and duties remain the same as before, so far as they are consistent with the incidents of partnership at will. The option saying they end or are reset ignores this rule.

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