You know that an agreement by, or with, a minor is void ab initio. Since partnership is created by an agreement, a minor cannot enter into partnership. He can however, be admitted to the benefits of the firm with the consent of all other partners by an agreement executed between his guardian and the partners of the firm. The rights and liabilities of a minor admitted to the benefits of a partnership are as follows:
Rights
i) In accordance with the agreement, the minor has a right to share the profits and the property of the firm. But he cannot take part in the conduct of the business of the firm.
ii) He has a right to have access to, and inspect and copy, any of the accounts of the firm. But he does not enjoy such right in respect of books other than account books as they may contain secrets which may be restricted to partner only.
iii) He has a right to file a suit for his share of profits or the property of the firm when he is not given his due share of the profits. However, he can exercise this right only when he decides to sever his connections with the firm.
iv) He can become partner in the firm on attaining majority and shall be entitled to the same share which he was getting as a minor.
v) On attaining majority, he also has the option to sever his connections from the firm and, if necessary, sue the firm for accounts and his share in profits and property of the firm.
Liabilities
The minor partner is liable only to the extent of his share in the profits and the property of the firm. He is not personally liable to the third parties and so his private property cannot be used for payment of the firm’s debts incurred during his minority. He cannot be declared insolvent if the firm’s debts cannot be repaid out of the property of the firm.
On attaining majority, however, if he becomes a partner in the firm, he shall become personally liable to third parties for all the acts of the firm done since he was admitted to the benefits of the firm.
Position on Attaining Majority
Within six months of his attaining majority or his obtaining knowledge that he had been admitted to the benefits of firm, whichever date is later, the minor partner has to decide whether he shall remain a partner or leave the firm. If he decides to sever his connections with the firm, he must give a public notice of his intention failing which it must be presumed that he has opted to become a partner in the firm.
When he becomes a partner: If the minor becomes a partner of his own volition or by his failure to give notice within the specified time, his rights and liabilities as given in Section 30 (7) are as follows:
i) He becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of the firm.
ii) His share in the property and profits of the firm remains the same as he was entitled as a minor.
When he elects not to become a partner: If he decides to severe his connection with the firm, his rights and liabilities as given in Section 30 (8) will be as follows:
i) His rights and liabilities continue to be those of a minor up to the date of giving public notice.
ii) His share is not liable for any acts of the firm done after the date of the public notice.
iii) He is entitled to sue the partners for his share of the property and profits in the firm
