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Thread: Can a minor become a partner in a firm? Discuss the rights and liabilities

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    Moodle Can a minor become a partner in a firm? Discuss the rights and liabilities

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    Position of minor in a firm
    Q. Can a minor become a partner in a firm? Discuss the rights and liabilities of a minor admitted to the benefit of a partnership.
    1. Introduction:
    A minor is not competent to contract so he cannot enter into a contract. Under partnership act a minor may be admitted to partnership with the consent of all other partners.
    According to Sec. 3(i)
    “Every partner has a right to prevent the introduction of a partner unless he consents to that.”
    2. Definition of minor:
    “A minor is a person who has not completed 18 year of age”.
    3. Law regarding minor of becoming partner of firm:
    According to Sec. 30
    “A person who is a minor according to the law which he is subject, may not be a partner in a firm, but with the consent of all partners for the time being, he may be admitted to the benefits of partnership.”
    Case law
    P. L. D 1955 Lah. 350
    It was held that under contract act a minor is incapable of entering into any contract thus a minor can not be partner in a firm but he can only be admitted to the benefit of partnership.
    4. Important rules:
    (i) There must be a partnership in existence before a minor can be admitted to its benefit.
    (ii) Consent of all partners is necessary.
    (iii) There can not be a partnership consisting of all minors.
    (iv) Minor’s position is limited only to the benefits of partnership.
    (v) If a minor is made full fledge partner under the terms of a partnership deed, the deed would be invalid.
    5. Position of minor:
    (I) Position of minor during minority:
    Position of minor during minority is as under.
    (i) Right of sharing profit:
    He has a right to receive his agreed profit of the firm.
    (ii) Inspection of accounts:
    He can inspect and take copies of the accounts of the firm.
    (iii) Can not conduct business:
    A minor can not take part in the management of the business.
    (iv) Can not be declared insolvent:
    A minor can not be declared insolvent.
    (v) Not liable for the acts of firm:
    A minor liability is limited and is not liable for the acts of firm.
    (vi) Filing suit:
    He has right to sue the other partners for his shares in profits or property of the firm when he breaks his relation with the firm.
    (II) Position on attaining majority:
    On attaining majority he must decide with in six months whether he shall continue in the firm or leave it. He should give public notice about his decision. If he fails to do so, will be considered a major partner.
    (a) In case of becoming a partner:
    If minor become partner his positions will be as under:
    (i) His rights and liabilities will be similar to those of a full fledged partner.
    (ii) He becomes personal liable to third parties for the debt and obligations of the firm.
    (iii) His share of profits and property remains the same unless altered by agreement.
    (b) In case of not becoming partner:
    His position will be as under:-
    (i) His rights and liabilities continue to “be those of a minor up to the date of giving public notice.
    (ii) He is not liable for the acts of firm done after the date of public notice.
    (iii) He is entitled to sue the partners for his share of profit in the firm.
    6. Disabilities of minor in a firm:
    Generally disabilities of minor in a firm are as under:
    (i) He may not be a partner.
    (ii) He may not sue the partner for accounts, save when serves his connection with the firm.
    7. Conclusion:
    To conclusion it can be said that, A minor can be admitted into the benefits of existing firm with the all others members. There can be no partnership of minor with one adult member. There must be at least two major partners before a minor is admitted for the benefits of the firm.

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