Write short note on Rights and liabilities of minor admitted to the benefits of a partnership.

Rights and Liabilities of a Minor Admitted to the Benefits of Partnership

Since a contract of partnership under Section 4 requires competence to contract, and a minor is incompetent under Section 11 of the Indian Contract Act, 1872, he cannot become a partner proper; Section 30 of the Indian Partnership Act, 1932, however, permits him, with the consent of all the partners for the time being, to be admitted to the benefits of partnership, conferring on him a distinctly limited set of rights and liabilities.

Rights during minority. Under Section 30(2), the minor is entitled to such share of the property and profits of the firm as is agreed between his guardian and the other partners, and he has the right to have access to, and to inspect and copy, any of the accounts of the firm, though this is narrower than a full partner's right under Section 12(d) to inspect all the books of the firm. Under Section 30(4), he may, on attaining majority or thereafter, sue the partners for an account or for payment of his share of the property and profits, but only after he has severed his connection with the firm.

Liabilities during minority. His liability for the debts and obligations of the firm is confined strictly to the extent of his share in the property and profits of the firm; his personal estate beyond that share cannot be touched by the firm's creditors. He cannot be made personally liable for any act of the firm, and he has no implied authority to act as its agent under Sections 18 and 19.

Duty to elect on majority. Section 30(5) requires him, within six months of attaining majority, or of first knowing of his admission to the benefits of partnership, whichever is later, to give public notice, in the manner prescribed for retirement under Section 32, electing either to become a partner or not to become a partner.

Consequences of electing to become a partner. Under Section 30(7)(a), his rights and duties become those of any other partner, and his liability becomes that of a full partner for all acts of the firm done since he was first admitted to the benefits of partnership, exposing his personal estate retrospectively to obligations incurred even during his minority.

Consequences of electing not to become a partner. Under Section 30(7)(b), his rights and liabilities remain governed by Section 30(2) up to the date of the notice, his share is not liable for acts of the firm done thereafter, and he retains his right under Section 30(4) to sue for his share.

Consequence of failing to elect. Under Section 30(6), failure to give notice within six months results in a deemed election to become a partner, with the same retrospective liability as under Section 30(7)(a), ensuring his indecision does not leave creditors and co-partners in uncertainty.

Illustration. A and B run a firm, and admit A's minor son, C, to its benefits with a one-fourth share. During minority, C is not personally liable for the firm's debts; creditors may reach only his one-fourth share in the firm's property. On turning eighteen, if C elects to become a partner, he becomes retrospectively liable for all debts incurred even during his minority; if he elects not to, his liability stays capped at his share up to the notice date, and he owes nothing for later transactions; if he does nothing for six months, he is deemed to have elected to become a partner, with full retrospective liability.