Partnership, Arbitration, and Contract Law Essentials

Posted on Dec 15, 2024 in Law & Jurisprudence

What is a Partnership?

A partnership is a kind of business where a formal agreement between two or more people is made. These individuals agree to be the co-owners, distribute responsibilities for running an organization, and share the income or losses that the business generates.

Rights of a Partner

The following are the rights of a partner in a partnership firm:

Right to Take Part in the Conduct of the Business: All the partners of a partnership firm have the right to take part in the business conducted by the firm, as a partnership business is a business of the partners, and their management powers are generally coextensive. If the management power of a particular partner is interfered with and the individual has been wrongfully precluded from participating, the Court of Law can intervene under such circumstances.
Right to be Consulted: When a difference of any sort arises between the partners of a firm concerning the business of the firm, it shall be decided by the views of the majority among the partners. Every partner in the firm shall have the right to express their opinion before the decision is made. However, there can be no changes like the business of the firm without the consent of all the partners involved.
Right of Access to Books: Every partner of the firm, regardless of being an active or a sleeping partner, is entitled to have access to any of the books of the partnership firm. The partner has the right to inspect and take a copy of the same if required. However, this right must be exercised bonafide.
Right to Stop the Admission of a New Partner: All the partners of a partnership firm have the right to prevent the introduction of a new partner in the firm without the consent of all the existing partners.
Right to Retire: Every partner of a partnership firm has the right to withdraw from the business with the consent of all the other partners. In the case of a partnership formed at will, this may be done by giving a notice to that effect to all the other partners.

Duties of a Partner

The following are the duties of a partner in a partnership firm:

General Duties of a Partner: Partners are legally bound to carry on the business of the partnership firm. The general responsibilities of a partner are listed below:
1. A partner is required to carry on the business to the highest common advantage.
2. A partner is required to be just and faithful to each other.
3. A partner has to render to any other partner or their legal representative about the true account and all the information of all the things affecting the partnership firm.
To Indemnify for Fraud: According to Section 10, a partner of the partnership firm is liable to compensate the firm for any damages caused to its business or the firm because of a partner’s fraud in the conduct of the business of the firm.
To Indemnify for Willful Neglect: According to the Section, a partner of a partnership firm must compensate the firm for any damages or loss caused to it by willful neglect in the conduct of the business of the firm.
To Share Losses: All the partners of a partnership firm are liable to contribute equally to the injury sustained by the firm.
To Account for Any Profit: If a partner of a partnership firm derives any profit for themselves for any transaction of the firm or from the use of the property or business connection of the firm or firm’s name, then the partner is bound to account for that profit and refund it to the firm.

Conditions and warranties may be express or implied.

Express conditions and warranties are which, are expressly provided in the contract. Implied conditions and warranties are those which are implied by law or custom; these shall prevail in a contract of sale unless the parties agree to the contrary.

i) Condition as to Title: In every contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller, that:

In case of a sale, they have a right to sell the goods, and
In case of an agreement to sell, they will have a right to sell the goods at the time when the property is to pass.
The words ‘right to sell’ contemplate not only that the seller has the title to what they purport to sell, but also that the seller has the right to pass the property. If the seller’s title turns out to be defective, the buyer may reject the goods.

iv) Condition as to Merchantability: Where the goods are bought by description from a seller, who deals in goods of that description (whether or not as the manufacturer or producer) there is an implied condition that the goods shall be of merchantable quality. Merchantable quality ordinarily means that the goods should be such as would be commercially saleable under the description by which they are known in the market at their full value.

v) Condition as to Wholesomeness: In case of sale of eatable provisions and foodstuff, there is another implied condition that the goods shall be wholesome. Thus, the provisions or foodstuff must not only correspond to their description, but must also be merchantable and wholesome. By ‘wholesomeness’ it means that goods must be for human consumption.

vi) Condition Implied by Custom or Trade Usage: An implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. In certain sale contracts, the purpose for which the goods are purchased may be implied from the conduct of the parties or from the nature or description of the goods. In such cases, the parties enter into the contract with reference to those known usage. For instance, if a person buys a perambulator or a medicine the purpose for which it is purchased is implied from the thing itself; the buyer need not disclose the purpose to the seller.

vii) Conditions in a Sale by Sample: A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied to that effect. Usually, a sale by sample is implied when a sample is shown and the parties intend that the goods should be of the kind and quality as the sample is.

viii) Conditions in a Sale by Sample as well as by Description: A vast majority of cases where samples are shown, are sales by sample as well as by description. In a contract for sale by sample as well as by description, the goods supplied must correspond both with the sample as well as with the description.

Implied Warranties

A condition becomes a warranty when:

The buyer waives the conditions or opts to treat the breach of the condition as a breach of warranty; or
The buyer accepts the goods or a part thereof, or is not in a position to reject the goods.

1. Implied Warranty of Quiet Possession: In every contract of sale, unless there is a contrary intention, there is implied warranties that the buyer’s shall have and enjoy quiet possession of the goods. If the buyer’s right to possession and enjoyment of the goods is in any way disturbed as consequences of the seller’s defective title, the buyer may sue the seller for damages for breach of this warranty.

2. Implied Warranty of Freedom from Encumbrances: The buyer is entitled to a further warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to buyer before or at the time when the contract is made. If the buyer is required to discharge the amount of the encumbrance it shall be a breach of this warranty and the buyer shall be entitled to damages for the same.

An arbitrator reviews testimony and evidence presented by the disputed parties at a hearing and resolves the dispute by issuing a decision that may include an award of money. You can think of an arbitrator as a private judge hired by the disputing parties to resolve their dispute. If the arbitration is binding, the parties cannot seek a reversal of the decision in court except under very limited circumstances. However, the successful party can seek help from a court in enforcing the arbitrator’s decision.

Powers and Duties of Arbitrator

Powers and duties of arbitrator:

(1) An arbitrator shall conduct an arbitration in a manner the arbitrator considers appropriate for a fair and expeditious disposition of the dispute.

(2) An arbitrator shall provide each party a right to be heard, to present evidence material to the family law dispute, and to cross-examine witnesses.

(3) Unless the parties otherwise agree in a record, an arbitrator’s powers include the power to:

Select the rules for conducting the arbitration;
Hold conferences with the parties before a hearing;
Determine the date, time, and place of a hearing;
Require a party to provide:
1. A copy of a relevant court order;
2. Information required to be disclosed in a family law proceeding under Title 40; and
3. A proposed award that addresses each issue in arbitration;
Meet with or interview a child who is the subject of a child-related dispute;
Appoint a private expert at the expense of the parties;
Administer an oath or affirmation and issue a subpoena for the attendance of a witness or the production of documents and other evidence at a hearing;
Compel discovery concerning the family law dispute and determine the date, time, and place of discovery;
Determine the admissibility and weight of evidence;
Permit deposition of a witness for use as evidence at a hearing;
For good cause, prohibit a party from disclosing information;
Appoint an attorney, guardian ad litem, or other representative for a child at the expense of the parties;

Void Contract

A contract that is legally not enforceable from the moment it is formed can be termed as a Void Contract. It can be nullified for some reasons. Contracts become void for a variety of reasons, including illegal consideration. Both voidable contracts and void contracts are different from one another. However, they can be drafted and created if and only if both parties wish to indulge legally.

Example: Reena agrees to a 50/50 split of royalties from her new album with a record label. Reena, on the other hand, has been drinking at the bar for several hours and is severely inebriated at the time of this agreement. Because Reena was incompetent when she signed the contract, it is null and void.

Agreement to Sell

An agreement to sell is a contract between a seller and a buyer where the seller agrees to sell an asset or property to the buyer at a specified price. The agreement to sell is also known as a sale agreement. It is generally used to sell immovable property such as land or buildings. The Agreement to Sell includes all the terms and conditions agreed upon by both parties. Generally, in India, sale agreements are made before registering the sale deed so that all conditions can be negotiated and finalized between the parties before making it legally binding.

Conciliation

Conciliation proceedings are a voluntary process where a neutral third party helps parties in a dispute reach a mutually agreed settlement.

Definition: Conciliation is a non-binding procedure where a neutral third party, called a conciliator, helps parties in a dispute reach a settlement.
Benefits: Conciliation is flexible, time and cost efficient, and ensures party autonomy.
Process: The parties can define the time, structure, and content of the proceedings. The conciliator’s role is to help the parties reach an agreement, not to dictate the terms or decision.
Examples: Conciliation can be used in a variety of situations, including:
1. Claims for improvements in pay or conditions of employment.
2. Disciplinary cases.
3. Grading issues

Transfer of Ownership

Transfer of ownership is the process of changing the ownership of a property or goods from one person to another:

When a vehicle is sold: The name of the new owner is registered in place of the previous owner.
In a contract of sale: The buyer takes ownership of the goods at different points depending on the type of goods. For example, the buyer takes ownership of specific goods when the contract is made, but takes ownership of future goods when they receive them.
Transfer of intellectual property: The rights and obligations of the intellectual property owner can also be transferred in a sale transaction.

Transfer of ownership is important because it determines who is responsible for the goods at a particular point. For example, if the goods are damaged or destroyed, the person who owned them at the time of the damage is responsible for the loss.