Partnership Firm (Effect of Non Registration)


Dear All,

Kindly put your inputs in the captioned subject matter where in a auction  a bid is made and duly acknowledged by and on behalf of the firm (wherein in actual sense on the date of making the bid, the firm  had not come in the existence by the virtue of execution of documents by the partners in this regard) and subsequently after acceptance of bid partnership documents were executed but not registered.

Is the bid legal and sustainable in the eye of law.

What will be the liability (joint and several) of the partners.

Your valuable comments are eagerly awaited.

Thanking you in advance

Best Regards


Legal Manager

Dear Daksh, Subsequent registration of the firm does not cure the initial defect and as such the bid is not legal. The liability if any (assuming the persons constituting the partnership as two) shall be equal unless the two persons show any proof of arrangement/agreement that in case of any dispute their liability shall be in some proportions or it may be that such an agreement may even exclude one person from liabilities. regards.,

The non existence of any written agreement in your case is not at all pose any impediment for the purpose of creating 'partnership.'. Please note that for the purpose of partnership the ingredients are like-

1.Agreement between the persons

2.They must be carrying on business at that time .

3. Motive should be for the purpose of sharing profit

4.Relation between them is of mutual agency.

Now we all know that contract can be made by words spoken or writtten.

So in your case if the activities of the concerned persons are fulfilling the above criteria then subsequent execution of a formal deed of partnership authenticating their nature of patnership already in force is not a stumbling block and hence the bid is legal.

As per section 13 the profit and loss of the partners are to be divded equally unless otherwise provided.


Dear Member:

Pl. check the bid documents. If  the conditions permit your action then there is nothing wrong as far as the tender is concerned. If your partnership deed has clause ratifying the earlier action incorporated you will not face any problem in regard to your partnership business also. Otherwise you will have to face the misic.


aar. krishnan


I agree with AA R




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