An electronic contract is essentially a digital counterpart of a traditional contract. An electronic contract must, however, be more than just a contract; it must also be a lawful contract under the law’s interpretation.

The Indian Contract Act of 1872 prescribes the conditions, fulfilling which an
agreement is deemed a valid contract. These include –

1. Offer and acceptance
2. Free consent
3. Capacity
4. Lawful consideration

These conditions are meant to ensure that the two parties entering into a contract
with each other possess the capacity to do so, are doing so freely and lawfully,
and are of the appropriate age. Additionally, the contract must entail an offer and
a verifiable means of accepting this offer.

Electronic contracts that meet these criteria are valid and can be upheld in a court
of law

Law governing e-contract

1.) Validity of Contracts Formed Through Electronic Means. – Where in a contract formation,
the communication of proposals, the acceptance of proposals, the revocation of proposals and
acceptances, as the case may be, are expressed in electronic form or by means of an electronic
record, such contract shall not be deemed to be unenforceable solely on the ground that such
electronic form or means was used for that purpose.
2.) Section (11) of Information Technology Act, 2000: An electronic record shall be attributed
to the originator—

(a) if it was sent by the originator himself;

(b) by a person who had the
authority to act on behalf of the originator in respect of that electronic record; or

(c) by an information system programmed by or on behalf of the originator to operate automatically.
Illustration: Pooja logs in to her web-based gmail.com email account. She composes an email
and presses the ―Send‖ button, thereby sending the email to Sameer. The electronic record
(email in this case) will be attributed to Pooja (the originator in this case) as Pooja herself has
sent it.

TYPES OF ONLINE CONTRACT

Online contracts can be of three types mainly i.e. shrink-wrap agreements, click or web-wrap
agreements and browse-wrap agreements. In our everyday life, we usually witness these types of
online contracts. Other types of online contracts include employment contracts, contractor
agreements, consultant agreements, Sale resale, and distributor agreements, non-disclosure
agreements, software development, licensing agreements, and source code escrow agreements.
a) Shrink-wrap agreements are usually the licensed agreement applicable in the case of software
product buying. In the case of shrink-wrap agreements, with the opening of the packaging of the
software product, the terms and conditions to access such software product are enforced upon the
person who buys it. Shrink-wrap agreements are simply those which are accepted by the user at
the time of installation of software from a CD ROM, for example, Nokia pc-suite.
b) Click-wrap agreements are web-based agreements that require the assent or consent of
the user by way of clicking the “I Agree’ or “I Accept” or “Ok” button on the dialog box. In click
–wrap agreements, the user basically has to agree to the terms and conditions for usage of the
particular software. Users who disagree with the terms and conditions will not be able to use or
buy the product upon cancellation or rejection. A person witnesses web-wrap agreements almost
regularly. The terms and conditions for usage are exposed to the users prior to acceptance. For
the agreement of an online shopping site etc.
c) An agreement made intended to be binding on two or more parties by the use of a website can
be called a browse wrap agreement. In the case of a browse wrap agreement, a regular user of a
particular website is deemed to accept the terms of use and other policies of the website for
continuous use.

d) Emails: Emails are not something you’d expect to see in a list of electronic contracts,
but they have been ruled in several cases, to constitute a legally binding contract. For example, in the case of Trimex International FZE vs. Vedanta Aluminium Limited, India 2010, the Supreme Court upheld the validity of an unregistered
and unsigned contract discussed via email; thus, confirming the enforceability of the contract through email.
Emails can also be signed electronically, which is an important criterion for deciding when an agreement becomes a contract.

E) Electronic signatures: Electronic signatures refer to the digital and verifiable counterparts of regular wet
signatures. Electronic signatures are used to sign documents online, which can
typically be done in two ways –
▪ Aadhaar-based signatures using an OTP
▪ Digital signatures that use an asymmetric public key system and hash algorithms, and allow users to sign documents with a password Intellectual Property laws are a branch of law that deals with the protection and enforcement of legal rights in respect of the original creations, inventions, designs, piece of music and artistic work of the creator or inventor. The purpose
of these laws is to encourage people to develop creative works that helps and benefit society by ensuring that the person developing an art, design, idea or technology can develop the same without fear. To protect intellectual property
rights, there are various types of contracts executed by the owner of the Intellectual Property.
G)Intellectual property Assignment Agreement
The agreement to assign the Intellectual property right transfers the intellectual property right completely or partially from the original creator to another person or organization for consideration. By this kind of an agreement, the original
owner transfers his right to develop or sell the said intellectual property to another person or legal entity. Assignments can be assignments of Patents governed by the Patents Act, 1970, Assignment of Trademarks governed by Trademark Act, 1999, and Indian Copyright Act, 1957. Following are the types of Assignments:

Assignment of Patents

Assignment of Trademarks

Assignment of Designs

Assignment of Copyrights

Assignment of confidential know-how

Assignment of Geographical Indications
Non-Disclosure Agreements
In order to protect the information falling under the branch of intellectual property, which is also dynamic for the functioning of the company, like trade secrets, business plans or business structures, technologies, or codes, you may
need to enter into NDAs while contemplating business relationships. NDA is usually entered between parties contemplating a deeper business relationship (such as two parties discussing a major licensing deal) to protect any disclosure
of confidential information in the future, even if the larger transaction is not successful. In that case, the non-disclosure obligations of the NDA continue to apply. Clauses that are included in NDAs are also common in other documents such as employment or consultancy agreements.
Technology Licensing or Technology Transfer Agreements
By this agreement the owner of the intellectual property authorizes another person or company to use such rights of the technology developed by the owner, for a considerable amount as agreed between the parties. This is a way to transfer
knowledge of technology. This helps small companies grow as they acquire such technology licenses from the bigger companies for the production and promotion of a product. Many joint venture agreements in the automobile sector in India have involved such arrangements, where the Indian company gets access to the foreign partner’s technological expertise and combines it with local distribution expertise in the Indian market. For example, Hero Honda (now terminated), Maruti Suzuki,
Mahindra – Renault, etc. are some examples.
Trademark Licensing and Franchising Agreement
Trademarks distinguish or help identify the goods and services of one’s company or entity, by a licensing or franchising agreement. The goodwill gained by such a mark is shared by another entity that will help promote the business or carry on
a business with the same mark and by maintaining the same standard of the business and its goods and service. Popular restaurants such as Mcdonald’s, Subway, Dominos, KFC, Pizza Hut, and coffee shops such as Starbucks follow a
franchising model.
Copyright Licensing Agreement
By this agreement, the owner of the copyrights can grant other people or companies the ‘license’ to monetarily exploit the copyright, such as by creating a reprint, or reproducing or distributing the original works on the terms and
conditions of the owner. A license can be very limited in scope, time, or territory, for example, it may only be for the creation of a translation (or a movie) and nothing else, restricted to a period of two years and the right to sell may be limited to a
particular state or country.
In exchange for such a right, the owner is paid a royalty or an amount of consideration as agreed upon by the parties. This does not permanently transfer the right of copyright to another person; it is licensed for some duration.
Inventions Assignment Agreement
This contract gives the employer the rights over the creation of his employee during the period of his employment. Usually, the employment agreement contains a clause whereby all the creations of an employee are the product of the
employer’s business. Further, these kinds of agreements and clauses also protect the confidential information of the company. Intellectual property right in an employer-employee relationship is by default assigned to the employer by virtue of
the Copyright Act but the same is not the case in respect of trademarks and patents. Hence, executing a separate inventions assignment agreement is necessary for this purpose.
Music License Agreement
A music license agreement is a contract between the creator of the music and a third party to exchange his composition for consideration, whereby giving a right to the third party to publish or distribute the music in various forms.
Research and Development Agreement
Such agreements are entered between a company with any individual or an organization for conducting research and development of an idea, goods, or services. They are generally entered in respect of:
• research in connection with manufacturing/ hardware products, or
• with professors who pursue research at universities, or
• with scientists working at companies.
The company or the university includes assignment clauses to assign any intellectual property developed to itself.
Work For Hire Agreements
These agreements are executed or entered between companies to hire an artist to
perform a certain piece of work or to create work that the company intends to
have copyright over, e.g. designs, logos, corporate videos, etc. It is important to
identify the work in which intellectual property is assigned.

Section 30 of the Indian Partnership Act, provides that though a minor cannot be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership by an agreement executed through his guardian with the other partners

 (a) Minor can become partner for the benefits of the partnership with the consent of all the partners

 (b) For admitting minor as a partner, an agreement shall be executed through his guardian Rights of minor in partnership firm Liabilities of minor in partnership firm  Right to share profits of the firm  Right to share property of the firm  Right to inspect accounts of the firm  Right to take copy of the accounts  Minor is not personally liable  However, share of minor in the firm is liable.

(c) There cannot be a partnership consisting of all minors.

Election on majority – 

a) On attaining majority, or his obtaining knowledge that he had been admitted to the benefits of partnership; whichever date is later, minor may within six months from such date give public notice that he has elected to a partner in the firm or not.

 b) If a minor fails to give such notice, he shall become a partner in the firm on the expiry of the said six months. 

The rights and liabilities of a minor who has been admitted to the benefits of partnership are governed by the following rules:

1. The minor is entitled to receive his agreed share of the property and of the profits of the firm.
2. The minor has the right of inspecting and taking copies of the books of account of the firm. He has, however, no such right in respect of books other than accounts, as they may contain secrets which should be restricted to the partners alone
3. The minor is not personally liable to the debts of 3^rd parties for the debts of the firm, but his liability is limited only up to his share in the partnership assets and profits. If partnership falls short in short in extinguishing the debts of the firm the separate person property of the minor cannot be applied for the payment of the debts of the firm.
4. The minor is not entitled to take part in conducting of the business as he has not representative capacity to bind the firm.
5. The minor cannot bring any suit against the partners for an account or payment of his share of the property or profits of the firm.
6. On attaining majority or on knowing that he had been admitted to the benefits of partnership, whichever is later, the minor must decide within 6 months whether he would like to become a partner in the firm and give public notice of his decision. If he remains silent and fails to give such a notice, it will be presumed that he has elected to be a partner in the firm.

If a partner carries on a company of the same nature as the firm and competes with that of the firm, the partner must be accountable for and pay to the firm all the profits made in the business by the partner. The partnership firm will not be held liable for any losses caused in the business.

The ‘dissolution of a firm’ is a major term used for the ‘partnership firm’ precisely. The dissolution of the firm takes place for numerous reasons like dissolution by agreement, dissolution by legal notice, insolvency of the partners, or simply if the partnership firm is illegal in nature. In case of dissolution of the firm, the entire firm halts from the operation. This is quite different from the ‘dissolution of partnership’. 

Thus, in this context let us know more about the dissolution of the ‘firm’ and its difference from the ‘dissolution of partnership’.

What is the Dissolution of a Firm?

Dissolution of a firm refers to the dissolution of an existing partnership that owns and controls a firm or an organization. While numerous reasons can lead to the partnership’s dissolution in a firm, usually a concerned organization is also dissolved under these circumstances. However, this may not always be the case.

 While understanding dissolution meaning, students must note that according to the Partnership Act, 1932, “The dissolution of a partnership between all the partners of a firm is called the dissolution of the firm”. By definition, this distinguishes between the dissolution of a firm and that of a partnership. 

Only in the event of an existing agreement among a firm’s partners can it be reconstituted without any dissolution despite the partnership being dissolved. Consequently, a firm’s dissolution always involves the dissolution of a partnership, while it’s inverse may or may not be accurate and depends on existing agreements. 

Types of Dissolutions

While learning how is a firm dissolved, students must note these ways mentioned below:

Dissolution by Agreement:(SEC 40) A firm can be dissolved with an agreement among its existing partners, though it should meet the following criteria:

Every partner of a firm must consent to its dissolution.

There must be legally binding contracts among existing partners.

Mandatory Dissolution/complusory Dissolution:(SEC41) Circumstances under which a firm is dissolved compulsorily are as follows:

When one or more partners of a firm become insolvent, making them incompetent to enter any contract or agreement.

If it becomes unlawful for a specific partnership firm to continue its business and revenue generation. Notably, this is not the same as that of dissolution by court order. An example in this regard would be when a partnership firm has a foreign partner and war is declared by this firm’s country of origin on that of its foreign partner. Under such circumstances, this firm must be dissolved.

Emergency Dissolution Due to Contingencies(SEC42): A firm can be dissolved based on an existing contract among its partners only under these circumstances that are listed below:If a firm was established for a fixed tenure and that term has expiredIf a firm was established for a specific venture and that venture has been completedA partner’s demiseIf a partner of a firm becomes insolvent.

Dissolution by Notice of partnership at will(SEC43): If the partnership of a firm is at will, one of its partners can issue a notice for its dissolution. It must be issued in writing to all the existing partners and clearly state his/her intention towards dissolving a firm.

Dissolution by the Court:(SEC44) When one of the partners of a firm files a legal suit, a court of law can direct the dissolution of a firm. That can be done on any of the following grounds described below.

 if a partner has become of unsound mind; 

 if a partner has become permanently incapable of performing his duties as partner; 

 if a partner is guilty of conduct which is likely to affect prejudicially the carrying on ofbusiness, regarding being had to the nature of business;  

if a partner wilfully or persistently commits breach of agreements relating to

a) the management of the affairs of the firm; or 

b) the conduct of its business; or

 c) otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnershipwith him; 

 If a partner has in any way –

 a) transferred the whole of his interest in the firm to a third party; or 

b) has allowed his share to be charged; or

 c) has allowed it to be sold in the recovery of the arrears of land revenue; or 

D) of any dues recoverable as arrears of land revenue due by the partner;  

the business of the firm cannot be carried on save at a loss; or  on any other ground which renders it just and equitable that the firm should be dissolved.

EFFECT OF DISSOLUTION 

A) Continuing authority of partners

1) Authority of the partners continues even after dissolution so long as is necessary to wind upthe business. 

2) each partner has an equitable lien over the firm’s assets which he can apply to pay the debtsof the firm and to receive any amount due from partnership firm.

 B) Continuing liability of partners

 1) Liability of partners continues till the public notice of dissolution is given. 

2) Liability of partners continues for all things necessary for the winding up of the business. Thepartners may complete unfinished transactions 

C) Right to Return of Premium

a) To buy entry into an existing firm, a new partner sometimes has to pay a premium to theexisting partners in addition to any investment of capital. 

b) On dissolution, he is entitled to demand the return of a proportion of the premium if thepartnership was for a fixed term and was dissolved before the expiry of that term 

c) However, in the following 3 cases, partner will not get the premium return –

 1) Where the partnership was dissolved by agreement; or 

2) misconduct of the party seeking return of the premium; or 

3) death of a partner. 

D) Settlement of Accounts on Dissolution (order of payment)

a) Losses shall be paid first out of undistributed profits next out of capital, and lastly, ifnecessary, by the partners individually in the profit sharing ratio.

 b) The assets of the firm including the losses contributed by the partner as above shall beapplied in the following manner – 

1) in paying outside creditors; 

2) in repaying advances made by partners 

3) in repaying capital to partners; and 

4) if any amount is left then it shall be divided in PSR.

Partnership is a relation between two or more persons agreeing to share the profit/loss of the business run by one or more person acting for all. The persons who have entered into the partnership are individually known as ‘Partners’.

The partners, in the partnership, enter into a partnership deed which generally defines all the rights and responsibilities of partners. Subject to the partnership deed entered between the partners, the provisions of the Indian Partnership Act, 1932 also defines certain general rights and responsibilities of partners.

Right to take part in the conduct of the Business Sec.12(a)

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. The Court can, and will, restrain the other partner from doing so by injunction. Other remedies are a suit for dissolution, a suit for accounts without seeking dissolution and so on for a partner who has been wrongfully deprived of the right to participate in the management.

The previously mentioned provisions of the law will be applicable unless there is no existing contract to the contrary among the partners. It is common to find a term in partnership agreements that gives only a limited power of management to a specific partner or a term that the control of the partnership will remain vested with one or more partners to the exclusion of others. In such a case, the Court of Law would generally be unwilling to interpose with the management with such partner (s), unless it is proven that something was done illegally or in the breach of trust among the partners.

Right to be consulted Sec 12(c)

When a difference of any sorts 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 his 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. As a routine matter, the opinion of the majority of the partners will prevail. Although, the majority rule would not apply when there is a change like the firm itself. In such situations, the unanimous consent of the partners is required.

Right of access to books Sec.12(d)

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 remuneration Sec 13 (a)

No partner of the firm is entitled to receive any remuneration along with his share in the profits of the business by the firm as a result of taking part in the business of the firm. Although, this rule may always vary by an express agreement, or by a course of dealings, in which case the partner will be entitled to remuneration. Thus, a partner may claim remuneration even in the absence of a contract, when such remuneration is payable under the continued usage of the firm. In simpler words, where it is customary to pay remuneration to a partner for conducting the business of the partnership firm, the partner may claim it even in the absence of a contract for the payment of the same.

It is common for partners to agree that a managing partner will receive over and above his share, salary or commission for the trouble that he will take while conducting the business of the firm.

Right to share profits Sec 13(b)

Partners are entitled to share all the profits earned in the business equally. Similarly, the losses sustained by the partnership firm is also equally contributed. The amount of a partner’s share must be ascertained by inquiring whether there is an agreement in that behalf among the partners. If there is no agreement, then it can be presumed that the share of profit is equal and the burden of proving that the shares are unequal, will lie on the party alleging the same.

The is no relation between the proportion in which the partners shall share the profits and the percentage in which they have contributed to the capital of the partnership firm.

Interest on capital Sec 13 (c)

If a partner subscribes interest on capital is payable to the partner under the partnership deed, then the interest will be payable out of the profits only in such a case. In a general rule, the interest on a capital subscribes by partners is not permitted unless there is an agreement or a usage to that effect. The underlying principle in this provision of law is that with concern to the capital brought by a partner in the business, the partner is not a creditor of the firm but an adventurer.

The following elements must be ensured before a partner can be entitled to interest on the capital brought by the partner in the business.

1. An express agreement to the same effect or the practice of a particular partnership.
2. Any trade custom to that effect; or
3. A statutory provision which entitles him to such interest on the capital.

Interest on advances Sec13(d)

If a partner makes an advance to the partnership firm in addition to the amount of capital to be contributed by him, the partner is entitled to claim interest thereon at 6 per cent per annum. While the interest on capital account ceases to run on dissolution, the interest on advances keeps running even after dissolution and up to the date of payment. It can be noted that the Partnership Act makes a distinction between the capital contribution of a partner and the advance made by him to the firm. The advance by the partner is regarded as loans which should bear interest while the capital interest takes interest only when there is an agreement to this effect.

Right to be indemnified Sec 13(e)

All the partners of the firm have the right to be repaid by the firm in respect of the payments made and the liabilities incurred by him in the ordinary and proper conduct of the business of the firm. This also includes the performance of an act in an emergency for protecting the firm from a loss, if the payments, liability and action are such as a prudent man would make, incur or perform in his case, under similar circumstances.

Right to stop the admission of a new partner Sec31

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 Sec32(1)

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.

Right not to be expelled Sec33

Every partner of a partnership firm has the right to continue in the business. A partner cannot be dismissed from the firm by any majority of the partners unless conferred by a partnership agreement and exercised in good faith and for the advantage of the partnership firm.

Right of outgoing partner to carry on a competing business Sec 36(1)

A partner outgoing from the partnership firm may carry on a business competing with that of the firm. The partner may even advertise such activity but has to do so without using the firm’s name or representing himself as carrying on the business of the firm or soliciting the clients who were dealing with the firm before the partner ceased to be a part of the partnership firm.

Right of outgoing partner to share subsequent profits Sec 37

If a partner has passed away or ceased to be a partner and the existing partners carry on the business of the firm with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate, the outgoing partner or his estate has, at his or his representative’s option, the right to such share of profit made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or interest at 6 per cent per annum on the amount of the partner’s share in the property of the firm.

Section 40: Right to dissolve the firm

A partner of a partnership firm has the right to dissolve the partnership with the consent of all the other partners. However, where the partnership is at will, the firm may be dissolved by any partner by giving notice in writing to all the other partners of his intention to dissolve the firm.

Duties of a Partner

General duties of a partner sec 9

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 his legal representative about the true account and all the information of all the things affecting the partnership firm.

To indemnify for fraud Sec 10

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 Sec13 (f)

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 attend duties diligently without remuneration Sec 12(b) & 13(a)

According to Section 12(b) of the Indian Partnership Act, every partner is legally bound to attend to his duties diligently to his duties relating to the conduct of the firm’s business. Moreover, Section 13(a) enumerates that a partner is not, however, generally entitled to remuneration for participating in the conduct of the business. A partner is also bound to let his partners have the advantage of his knowledge and skill.

To share losses Sec13 (b)

All the partners of a partnership firm are liable to contribute equally to the injury sustained by the firm.

To account for any profit Sec16(a)

If a partner of a partnership firm derives any profit for himself 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.

Partnerships are a form of business association between two or more persons who join to carry on a trade or business. Each person contributes money, property, labour or skill and expects to share in the profits and losses of the business.

As per Section 4 of The Indian Partnership Act, 1932 “Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm” and the name under which their business is carried on is called the “firm-name

TYPES OF PARTNERSHIP

 (a) Partnership at will is a partnership formed for an indefinite period. Time period of partnership is not fixed norspecified.

 1)Such type of partnership can continue for anyperiod of time depending upon the will of t the partners. 

2)It can be dissolved by any partner by giving a notice to the other partners of his desire to quit the firm.

 (b) Particular Partnership is a partnership formed for a specific time for a specific purpose.  Once the time is over or purpose is achieved, it cease to exist 

(c) Partnership for a fixed period is a partnership formed for a fixed period between partners.

TYPES OF PARTNERS 

Working partner or Active partner – – Active partner contributes capital and also takes active part in the management of the firm. – He bears an unlimited liability for the firm’s debts. – He is known to outsiders. – He shares profits of the firm. – He is a full-fledged partner. 

Sleeping Partner:

Sleeping partner does not indulge in the working of the firm. He/She does not invest time and effort and ignores almost all of the firm’s daily operations. His/Her involvement is limited only to providing their share of capital to the business. 

A sleeping partner shares both profit and losses. He/She may get a lesser amount of profits to compensate the working or active partners.

Dormant Partner:

Dormant partner is a partner who invests capital, may take part in management decisions but do not disclose his/her status as a partner to the outside world. A dormant partner may also be called a secret partner as their role as a partner in the firm is not known to many. 

The liability of a dormant partner may be limited to the extent of their capital or contribution, as they can’t be held liable for overall projects. They may get profit up to the projects that they were indulged in.

Partner in profits only – – Partners in profit only share in the profits of the firm but not in the losses; – His liability is unlimited; – He is not allowed take active part in the business; – Such a partner is associated for his money and goodwill. 

Nominal Partner – – Nominal partner only lends his name and reputation for the benefit of the firm. – He represents himself or knowingly allows himself to be represented as a partner – Such type of partner neither contributes capital nor takes part in the management ofbusiness. – He does notshare in the profits or losses of the firm.

Ostensible Partner or Partner by Estoppel:An ostensible partner or partner by estoppel is one who by his acts appear to be a partner of the firm. He leaves an impression in front of others that he is associated with the partners of a firm and is one of them. 

Such a partner is liable for losses or liabilities caused by such an impression or illusion that he created in the minds of the clients, shareholders, etc. Such a partner must express his role of being a partner either using express or implied words. 

Partner By Holding Out:A partner by holding out is one who is represented by other partners to be a partner of the firm. He is held accountable only when he does not interfere or deny such claims of the partners. It is thus the duty of a person to clarify if someone falsely claims them accountable and a part of a firm as a partner. 

A partner by holding out just like a partner by estoppel is liable only for the amount of loss that the firm incurs due to that false representation. He is not entitled to any profit. 

Partner in Profit Only:A person who, as a partner in a firm, receives only profit is a partner in profit only. All other partners of the firm must agree to the entry of such a partner. A partner in profit only is not liable for losses and cannot be asked to compensate in any such situation of loss.

Minor as a Partner:A minor can be admitted to a partnership by the partners’ consent. A minor can only receive profit and is a partner in profit only. He/She cannot be held liable for any losses. A minor can be admitted with the consent of his/her guardian. 

After acquiring the age of majority, the minor can choose to either quit the firm and receive all the profits accruing to date or continue as a normal partner and be liable to the losses from the date of his joining the firm. 

Secret Partner:A secret partner is one who does not disclose the fact of being a partner in the firm to anyone. Such a partner may take part in the firm’s daily operations or contribute capital and thus share profit and loss with the partners. Such a partner shares both profit and loss with other partners.

Outgoing Partner:

An outgoing partner decides to leave the firm. A partner may leave a firm due to various reasons like a conflict of ideas, dissatisfaction relating to profit sharing ratio, etc. An outgoing partner may need to serve a notice period or may be required to fulfil certain conditions even after disassociating with the firm. 

When a partner decides to leave a firm, the accounts of the firm are closed. The partners must either restart or reform the partnership after deciding various aspects like profit-sharing ratio, capital requirements, etc. 

An outgoing partner must compensate for his share of all the losses that the firm incurred during his tenure. After clearing all the debts and paying off all the liabilities, leftover profit is shared among the old partners in a fixed profit sharing ratio. Old reserves, funds, etc., are also cleared at such a time. 

Limited Partner:A limited partner is one whose terms of liability is fixed and ascertained previously. Such a partner may receive profit in the same ratio as the loss. In case of loss, such a partner cannot be asked to compensate more than that ascertained amount. In most cases, the amount of the capital is equal to the amount of liability; thus, that partner is not entitled to lose more than that. 

Sub-Partner:A person who is not a direct partner in a firm but receives profit indirectly is known as a sub partner. When a firm partner decides or determines to share part of his profit with any other person or any other third party, such party or person is referred to as sub-partner of the firm.

Such a partner is not anyhow entitled to claim any share of profit from the firm. Such right is limited only up to the partner who agrees  to share his part. The firm also cannot force such partners to compensate for any loss.

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Partnership deed is a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The purpose of a partnership deed is to provide clear understanding of the roles of each partner, which ensures smooth running of the operations of the firm.

What is a Partnership Deed?

Partnership deed is a partnership agreement between the partners of the firm which outlines the terms and conditions of the partnership between the partners. The purpose of a partnership deed is to provide clear understanding of the roles of each partner, which ensures smooth running of the operations of the firm.

The Partnership comes into the limelight when:

• There is an outcome of agreement among the partners.
• The agreement can be either in written or oral form.
• The Partnership Act does not demand that the agreement has to be in writing. Wherever it is in the form of writing, the document, which comprises terms of the agreement is called ‘Partnership Deed.’
• It usually comprises the attributes about all the characteristics influencing the association between the partners counting the aim of trade, the contribution of capital by each partner, the ratio in which the gains and losses will be divided by the partners and privilege and entitlement of partners to interest on loan, interest on capital, etc.

Registration of Partnership Deed:

All the rights and responsibilities of each member are recorded in a document known as a Partnership Deed. This deed can be oral or written; however, an oral agreement is of no use when the firm has to deal with tax. A few essential characteristics of a partnership deed are:

• The name of the firm.
• Name and addresses of the partners.
• Nature of the business.
• The term or duration of the partnership.
• The amount of capital to be contributed by each partner.
• The drawings that can be made by each partner.
• The interest to be allowed on capital and charged on drawings.
• Rights of partners.
• Duties of partners.
• Remuneration to partners.
• The method used for calculating goodwill.
• Profit and loss sharing ratio.

Partnership Deed Contents

While making a partnership deed, all the provisions and the legal points of the partnership deed are included. This deed also includes basic guidelines for future projects and can be used as evidence at times of conflict or legal procedures. For a general partnership deed, the below mentioned information should be included.

• Name of the firm as determined by all partners.
• Name and details of all the partners of the firm.
• The date on which business commenced.
• Firm’s existence duration.
• Amount of capital contributed by each partner.
• Profit sharing ratio between the partners.
• Duties, obligations and power of each partner of the firm.
• The salary and commission if applicable that is payable to partners.
• The process of admission or retirement of a partner.
• The method used for calculating goodwill.
• The procedure that must be followed in cases of dispute arising between partners.
• Procedure for cases where a partner becomes insolvent.
• Procedure for settlement of accounts in the event of dissolution of a firm.

Importance of partnership deed

 A few important advantages of a well-drafted deed are listed:

• It controls and monitors the rights, responsibilities and liabilities of all the partners
• Avoids dispute between the partners.
• Avoids confusion on profit and loss distribution ratio among the partners.
• Individual partner’s responsibilities are mentioned clearly.
• Partnership deed also defines a remuneration or salary of the partners and working partners. However, interest is paid to each partner who has invested capital in the business.

 

Partnerships are a form of business association between two or more persons who join to carry on a trade or business. Each person contributes money, property, labour or skill and expects to share in the profits and losses of the business.

Partnership is a form of business organization, where two or more persons join together for jointly carrying on some business. It is an improvement over the ‘Sole-trade business’, where one single individual with his own resources, skill and effort carries on his own business. Due to the limitation of resources of only a single person being involved in the sole-trade business, a larger business requiring more investments and resources than available to a sole-trader, cannot be thought of in such a form of business organization. In partnership, on the other hand, a number of persons could pool their resources and efforts and could start a much larger business, than could be afforded by any of these partners individually. In case of loss the burden gets divided amongst various partners in a Partnership

As per Section 4 of The Indian Partnership Act, 1932 “Partnership” is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all Persons who have entered into partnership with one another are called individually, “partners” and collectively “a firm” and the name under which their business is carried on is called the “firm-name”.

Registration of Partnership Firm

As per the Partnership Act 1932, it is not compulsory to register a partnership firm. The firm does not have a separate legal identity and registration will not alter this fact. However, registration is the definite proof of the existence of the firm and its legality. Non-registration of a firm has some real-life legal consequences for the partners and the firm itself. So it is always advisable to draw up a written partnership deed and register the firm with the Registrar of Firms. The consequences of not doing so are as follows:

•  The firm cannot file legal proceedings against any third party for any situation. For example, if the client has not paid his dues to the firm, the firm cannot sue him if it is unregistered. 
•  An unregistered firm cannot fail a case against a partner for any reason (like mismanagement, theft etc.) 
•  A partner of an unregistered firm cannot file a suit against one of the other partners either

Procedure of Registration

 According to the India Partnership Act 1932, there is no time limit as such for the registration of a firm. The firm can be registered on the date when it is incorporated or any such date after so. The requisite fees and fines must be paid. The procedure for such a registration is as follows :

• Application to the Registrar of Firms in the prescribed form (Form A). Nowadays this facility is even available online. Such an application must contain certain basic details about the firm such as :

•  l Name of the Partnership Firm
•  Name and address of all partners 
• Place of business (address of main and branch offices)  
• Duration of the partnership 
•  Date of joining of partners 
• Date of commencement of business

•  The duly signed copy of the Partnership Deed (which contains all the terms and conditions) must be filled with the registrar 
•  Deposit/pay the necessary fees and stamp duties 
• Once the registrar approves the application, the firm will be entered into the records. And the registrar will also issue a certificate of incorporation

 What are E-Contracts?

 E-Contract is an aid to drafting and negotiating successful contracts for consumer and business e-commerce and related services. It is designed to assist people in formulating and implementing commercial contracts policies within e-businesses. It contains model contracts for the sale of products and supply of digital products and services to both consumers and businesses. An e-contract is a contract modeled, executed and enacted by a software system. Computer programs are used to automate business processes that govern e-contracts. E-contracts can be mapped to inter-related programs, which have to be specified carefully to satisfy the contract requirements. These programs do not have the capabilities to handle complex relationships between parties to an e-contract 

An electronic or digital contract is an agreement “drafted” and “signed” in an electronic form. An electronic agreement can be drafted in the similar manner in which a normal hard copy agreement is drafted. For example, an agreement is drafted on our computer and was sent to a business associate via e-mail. The business associate, in turn, e-mails it back to us with an electronic signature indicating acceptance. An e-contract can also be in the form of a “Click to Agree” contract, commonly used with downloaded software: The user clicks an “I Agree” button on a page containing the terms of the software license before the transaction can be completed. Since a traditional ink signature isn’t possible on an electronic contract, people use several different ways to indicate their electronic signatures, like typing the signer’s name into the signature area, pasting in a scanned version of the signer’s signature or clicking an “I Accept” button and many more.

 E-Contracts can be categorized into two types i.e. web-wrap agreements and shrink-wrap agreements. A person witnesses these e-contracts everyday but is unaware of the legal intricacies connected to it.

Web-wrap agreements are basically web-based agreements which require assent of the party by way of clicking the “I agree” or “I accept” button e.g. E-bay user agreement, Citibank terms and conditions, etc.

Shrink-wrap agreements are those which are accepted by a user when a software is installed from a CD-ROM e.g. Nokia pc-suite software. 

ESSENTIAL ELEMENTS OF ONLINE CONTRACT 

1) Offer –There must be a lawful proposal or offer made by one party known as the proposer and it is the starting point of a contract. By browsing and choosing the goods and services available on the website of the seller, the consumer makes an offer to purchase such in relation with the invitation to offer made by the seller.

 2) Acceptance – When a proposal or offer is accepted by the person to whom the offer is made, it becomes a promise. The acceptance of the proposal must be unconditional and absolute and must be communicated to the proposer or the offeror. In case of an online contract, offer and acceptance can be made through e-mails or by filing requisite forms provided in the website. They may also need to take an online agreement by clicking on ‘I Agree’ or ‘I Accept’ for availing the services offered. 

3) Intention to create legal relationship – If there is no intention of creating legal relationship on the part of the parties to contract, there is no contract between them. 

4) There must be a lawful object – Parties to the agreement must contract for a legal object. A contract is only enforceable by law only when it is made for a lawful purpose. It must not defeat any provision of law and must not be fraudulent in nature. Thus, a contract on a website designed for the purpose of selling illegal substances online is a void contract. 

5) There must be a legal or lawful consideration – Consideration is one of the most important elements of a contract. The basic rule is that when a party to a contract promises to perform his promise he must get something in return for the performance of his promise. Consideration is something of some value in the eyes of law. It may be of some benefit, right, interest or profit given to the party as inducement of promise. An act constituting consideration must be moved at the desire of the promisor and must be legal, real and not imaginary. Promises that are physically impossible to perform cannot have real consideration. For eg. an online site that offers purchase of land on the moon. 

6) Capacity of parties – Parties to a contract must be capable of entering into a contract. He must attain the age of majority and must be of sound mind. He must not be disqualified from contracting by any law for the time being in force. In our country an agreement where either party is a minor has no significance. It is considered as void ab-initio. 

7) There must be free and unaffected consent – Consent which is defined under Section 13 of the Indian Contract Act, 1872 is an essential requirement of a contract. It is basically the meeting of minds of the parties. When both agree upon the same thing in the same manner, they are said to consent. In case consent is caused by coercion, it is voidable at the option of the party whose consent was so caused. 

8) Possibility of performance – The terms and conditions of agreement must be certain and not vague and must also be such as are capable of performance. An agreement to do an act impossible in itself cannot be enforced as per section 29 of the Indian Contract Act, 1872. 

Law governing e-contract 

1.) Validity of Contracts Formed Through Electronic Means. – Where in a contract formation, the communication of proposals, the acceptance of proposals, the revocation of proposals and acceptances, as the case may be, are expressed in electronic form or by means of an electronic record, such contract shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose. 

2.) Section (11) of Information Technology Act, 2000: An electronic record shall be attributed to the originator— (a) if it was sent by the originator himself; (b) by a person who had the authority to act on behalf of the originator in respect of that electronic record; or (c) by an information system programmed by or on behalf of the originator to operate automatically. 

Illustration 1: Pooja logs in to her web-based gmail.com email account. She composes an email and presses the ―Send‖ button, thereby sending the email to Sameer. The electronic record (email in this case) will be attributed to Pooja (the originator in this case) as Pooja herself has sent it. 

Copyright Act

 (a) The IT Act provides a wider scope to the authorities to harass ISPs in matters where their liability is the question.

 (b) Which actions can be termed as done with ‘due diligence’ is not defined anywhere in the act. 

(c) Who is an ISP? The answer to this question is not given under the IT Act. Also, the IT Act does not provide for the liability of ISP. The liability of an ISP is the same as for anyone who is simply a communication carrier. 

 In the case of Playboy Enterprises v. Frena, a BBS operator whose bulletin board contained copyrighted photographs owned by Playboy was found liable of violating the right to display and publish the photographs. This was true even though the BBS operator did not make the copies himself, and in fact was never proven to have knowledge of their existence. In effect, this case held the BBS operator liable merely for providing a means by which copies (made by others) could be distributed to the public. If this logic were extended to ISPs in general, an ISP could be held liable for its member’s activities on the ISPs web and newsgroup servers, even without knowledge of such activity. However, it is unlikely that such a ruling would ever be made given the major impact such a position would have on the expansion of and access to the Internet. 

Trademark liability

ISPs are liable for their own activities that constitute trademark infringement. As a result, if an ISP were to advertise their services under a trademark that is confusingly similar to a mark of another party (such as Netcom, IBM Link, or CompuServe), they would be exposed to charges of trademark infringement. In addition, if an ISP’s own web page contains theISPs are in a slightly different position when one of their customers misuses a trademark of another. In this case, the ISP may very well face possible liability under the theory of contributory trademark infringement. Much like contributory copyright infringement, contributory trademark infringement liability may exist where the ISP causes or contributes to the infringing conduct of another with knowledge of the other party’s infringing activities. Although such a case has not yet been analyzed by any court, one can imagine a situation where an ISP is notified of trademark infringement on one of its customer’s web pages and yet fails to act on this notification. By analogy to the Netcom decision discussed in connection with recent ISP copyright cases above, the ISP in this case may in fact face legal action for trademark infringement.  trademarks of another, the ISP’s use of those marks would be analyzed like any other web page owner (see Bit Law’s discussion on Internet trademark infringement for more information). 

Online Trademarks Infringement

Nowadays, the Internet is the main means of communication. Although it has a high number of users, the Internet is also an ideal tool for committing offenses. The main problem regarding online trademarks infringement may arise when the internet user commits a crime through the services of the ISP, can the ISP be liable? While considering the liability of ISPs in India for trademark infringement, the following Acts are important; the first one is the Trademarks Act, 1999 and the Information Technology Act, 2000. Clause (6) of Section 29 of the Trade Marks Act, 1999 sets out what constitutes use of a registered trademark. Subsection (b) states that use is when an entity that “offers or exposes goods for sale puts them on the market, or stocks them for those purposes under the registered trademark or offers or supplies services under the registered trademark”. This can be interpreted to include service providers, whether they are ISPs or auction or ecommerce websites that facilitate infringement by stocking the goods bearing the registered trademarks. Firstly, the ISP can look for contents, which are uploaded and can filter them if they want to. But this will not be favorable for their clients as it will harm their privacy and freedom from online censorship. Again, it would be a costly affair as there is so much content that has to be filtered by the ISPs, and moreover, it is not possible to look at the content and understand if its copyright protected or not. The only other alternative that ISPs have is to make their clients sign an indemnity contract, therefore, letting them assume all responsibility in the case of any trademark infringement. From the viewpoint of any Internet Users- if ISPs are made responsible for infringements, then smaller ISPs will be forced to shut down. The larger ones will charge more as they have to deal with potential lawsuits. Ultimately, this cost will be shifted to the customers, making access to the cost of the Internet higher. However, if the ISPs are not made liable, the problem of piracy will keep on increasing. 

Due Diligence: For India, the rules for due diligence have been prescribed in the Information Technology Guidelines (Intermediaries Rules) 2011. Under these rules due diligence requires the intermediaries to take the following steps: 

• Appointment of Grievance Officers- the ISPs must appoint a grievance officer, and this must be made known to the public. 

• They must publish a) a set of rules and regulations b) a privacy policy and c) a user agreement for access to usage of their resources.

 • Intimation of consequences of non- compliance by users: The Intermediary is also required to inform the clients that in the case of non-compliance they can terminate access. 

Intermediaries: An internet intermediary is an entity which provides services that enable people to use the internet. There are many different kinds of internet intermediaries which fall into two broad categories: “conduits” and “hosts”. “Conduits” are technical providers of internet access or transmission services. Conduits do not interfere with the content they are transmitting other than for automatic, intermediate or transient storage needed for transmission. “Hosts” are providers of content services – for instance, online platforms and storage services.

 Liability of Intermediaries The Information Technology Act, 2000 has been amended in 2008, so as to broaden the definition of intermediaries and to include internet service providers, online payment sites, online auction sites, etc. According to the Information Technology Act, 2000 an intermediary must not knowingly publish, host, or initiate transmission of unlawful information. The intermediary will be liable if: 

1) It has aided or induced the commission of the unlawful act knowingly. 

2) Even after being notified by a Government agency the intermediary fails to remove any content, which is being used for some illegal activity. 

The amended Section 79 of the Information Technology Act, 2000 provides that an intermediary will be liable when it: 

1) Initiates the transmission. 

2) Select the receiver of transmission. 

3) Selects or modifies the information available in some way. 

4) Does not observe due diligence. 5) Plays an active part in the infringement of the trademark. 

Partnership

A partnership firm is a type of business entity that is formed by the association of two or more members who have agreed to share the profits of the business, which is carried on by all partners or one partner acting for all

Indian Partnership Act 1932. defines partnership has ” partnership is a relationship between two or more persons who have agreed to share the profits of a business carried on by all partners or any one partner acting for all”. the members of the partnership firm are called as partners.

COMPANY

A company is said to be a legal entity that is an association of a group of persons engaged in operating a business. It is voluntary and autonomous in nature.

Indian Companies Act, 2013 define ” Company formed and registered under this Companies Act or under any previous company law”. A Company is defined easily as an association of two or more persons which is formed for doing business collectively and registered with registrar of companies according to companies Act.

Basis of Difference	Partnership	Company
Meaning	It is a contract in which two or more persons are agreed to share profits/losses, ownership, responsibilities, and duties.	It is a legal entity in which a group of persons agreed to share ownership but not management for a specific purpose.
Governed By	It is regulated by the Partnership Act,1932.	It is regulated by the Companies Act, 2013.
Registration	The registration of a Partnership firm is not compulsory.	The registration of a Company with the registrar of companies is compulsory.
Members	The members of a Partnership firm are known as Partners.	The members of a company are known as Shareholders.
Number of Members	To form a partnership firm, the minimum number of partners is two with a maximum limit of 50 members.	In the case of a public company, a minimum of 7 members are required with no maximum limit. Whereas for a private company, at least two members are required with a maximum limit of 200 members.
Liability	The liabilities of the partners is unlimited.	The liabilities of shareholders are limited to the value of shares held by them. But in the case of companies with unlimited liability, the shareholders possess unlimited liability.
Distribution of Profits	The profits are distributed as per the partnership deed. However, in the absence of a partnership deed, the profits are distributed equally among the partners.	It depends upon the Articles of Association or the decisions of directors.
Regulatory Authority	It is regulated by the registrar of firms under the State Government.	It is regulated by the registrar of companies under the Central Government.
Documents	A partnership deed is the main document needed to create a partnership firm.	The Memorandum of Association and Articles of Association are the main documents needed to create a company.
Separate Entity	It is not a separate entity as the partners of the firm collectively are known as a Partnership firm.	The company is a separate legal entity from its members and directors.
Audit	The audit of books of accounts for a partnership firm is not mandatory.	In a company, it is mandatory to audit the books of accounts.
Management	The whole operations are managed by all the partners themselves or any of them acting for all.	Here, the directors, elected by shareholders manage the business operations.
Transfer of Shares	A partner cannot transfer his profit share to anyone without the consent of partners.	The transfer of shares is not restricted except the private companies.
Type of business	In partnership, any type of business can be carried out with the consent of all partners.	A company is bounded to carry that business only which is permitted by the Objects Clause of the Memorandum of Association.
Winding Up	The partnership firm can be wounded by the agreement of all partners. However, in case if the firm is unable to pay its debts, then it has to be wound up by the order of the court under the Insolvency Act.	The company can be wound up by the process prescribed in the Companies Act, 2013 only.
Continuity	It is affected by the death, retirement, or insolvency of any partner.	The death, insolvency of shareholders, and transfer of shares don’t affect the continuity of the company.
Common Seal	The partnership firm doesn’t require any seal.	A company requires a common seal or stamp for legal or functional purposes.
Change in Name	The partnership firm can easily change its name with the consent of all partners.	It is not easy for a company to change its name as it requires prior approval from the Central Government.
Minimum Capital required	There is no such requirement.	In the case of a private company, a minimum of 1 lakh of capital is required. While in a public company, a minimum of 5 lacs of capital is required.

A Limited Liability Partnership (LLP) and a partnership firm are two types of business structures through which partners can carry out their business. A minimum of two persons willing to be partners are required to establish an LLP or a partnership firm. LLP is a new concept, while a partnership firm is an old concept.

The concept of LLP was introduced in 2008 through the Limited Liability Partnership (LLP) Act. However, partnerships in India have been established under the Indian Partnership Act since 1932. Though an LLP and partnership firm requires a partnership between two parties for its establishment, it has many differences.

Limited Liability Partnership (LLP)

An LLP is a corporate business form that provides the benefits of a partnership firm and a company. It is a hybrid between a company and a partnership firm as it incorporates properties of both structures.

An LLP has a separate legal entity in the eyes of the law, and it is liable for the full extent of its assets. Partner’s liability is limited to their contribution to the LLP. Partners of an LLP are responsible only for their own actions.

The LLP enables professionals, entrepreneurs, and enterprises engaged in scientific and technical disciplines or providing services of any kind to form commercially efficient vehicles suited to their requirements. Establishing an LLP is suitable for small and medium enterprises due to its structural and operational flexibility and obtaining investment from venture capitalists.

Partnership Firm

A partnership firm is very popular in India and is one of the oldest forms of business structure. It is easy to establish a partnership firm as it needs to comply with a minimum set of rules and regulations.

A partnership means an agreement between two or more persons who pool their capital and resources to contribute to the business and agree to share the business profits. The partnership firm is established when all the partners/individuals enter into a partnership agreement/deed and run business under the partnership firm name.

The registration of a partnership firm is not mandatory. The law recognizes the partnership firm even when it is not formally registered, and all the firm partners are responsible for any loss caused to third parties by the firm.

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