Position of Minor in Parnership

POSITION OF A MINOR IN PARTNERSHIP

According to Section 4, Indian Partnership Act, 1932, Partnership arises out of a contract. It is, therefore, necessary that the parties to the contract of partnership should be competent to contract. A minor being incompetent to contract cannot become a partner. If a minor is made a full-fledged partner along with other major persons, the agreement would be void and the deed containing their contract would be unenforceable even as between the other major partners. (Dharam Vir v. Jagan Nath, A.L.R. 1968 Punj. 84)

Apart from that any person who is of the age of majority, a who is of sound mind, can employ an agent (Section 183). A minor therefore, become a principal. In a partnership, every partner deemed to be a principal (apart from being an agent as well), but since a minor cannot be a principal, he cannot become a partner for that reason also. and cannot become a partner for that reason also.

A minor is not competent to enter into a contract. He however, accept benefits. In accordance with that position of a minor, Section 30, Indian Partnership Act, declares that a minor may not be a partner in a firm, but with the consent of all the partners for the time being, he may be admitted to the benefits of partnership. If a minor is admitted to the benefits of partnership, he has a such share of the property and of the profits of the firm as may be agreed upon and may also have access to and inspect and copy any of the accounts of the firm. Such a minor is not personally liable towards the third parties for any act of the firm but only his share is liable for such acts.

On attaining majority, such a minor has an option either to become a partner or not to become a partner and leave the firm. This option can be exercised by him within a period of six months from the date of attaining the majority. But if he did not know that he had been admitted to the benefits of partnership, then he may exercise the option within six months of his obtaining the knowledge that he had been admitted to the benefits of partnership. Such option has to be exercised by him by giving a public notice. If he fails to exercise the option either way, then on the expiry of the above stated period of six months, he automatically becomes a partner.

If a minor, who had been admitted to the benefits of partnership, becomes a partner, his rights and liabilities as that of a minor continue up to the date on which he becomes a partner, but he also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of partnership.? It means that if a minor on attaining majority has become a partner his liability towards third parties is not only for the acts of the firm which were done after he becomes a partner, but his liability towards the third parties is retrospective for all the acts of the firm done since the date of his admission to the benefits of partnership. His share in the property and profits of the firm shall be the share to which he was entitled as a minor.

In case, on attaining majority he elects not to become a partner, his rights and liabilities shall continue to be those of a minor as stated above, up to the date on which he gives public notice. His share will not be liable to any act of the firm which is done after such notice.