Law

which one is right?

a minor can be admitted into partnership ONLY in a new firm 

OR
a minor can be admitted into partnership ONLY in an existing firm

Replies (4)

Both statements are correct. A minor can be partner in a firm for profit sharing only.

A minor can be admitted to benefits of any patnership firm ( He can take profits but he is not liable for any liabilities of the firm)

A minor can be admitted to benefits of any patnership firm with the consent of all partners ( He can take profits but he is not liable for any liabilities of the firm). So both the statements are incorrect due to the inclusion of the word "ONLY" and due to the fact that It doesn't exclude the liabilities of the partnership for the minor

The second statement is absolutely correct. The first one is wrong. Let me explain the meaning of the first one. As per first statement, two or more major persons and a minor can form a partnership de novo i.e. a new partnership. This is not possible as Sec 5 says that partnership is a relationship created by contract and not by status. Consequently, all the partners will need to enter into a partnership 'contract' to bring partnership into existence. But a minor is not competent to enter into a contract. Hence no new partnership can be formed with minor as one of the partners.

The second statement is absolutely correct. As per Sec 30(1) of the Indian Partnership Act, a minor cannot be a partner in a firm (which means a new firm) but he can be admitted to the benefits (profits) of the 'existing' firm only. However, even then he will not be liable personally for the debts and liabilities of the firm. He will also not share the losses of the firm. Only his share of profit and property can be used to settle the liabilities and debts of the firm.    

 

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