Legal Question in Business Law in India

If A,B,C are willing to start a partnership business, A&B are the investors,C is giving his technology. A&B are agree to give a share to C in profit, they also said that C is not required to share the loss. suppose there is a loss in business, and A&B are denying their statement, and asking C to share loss. what should C want to do ?

And to avoid this conflict how should the agreement is prepared and how C is to be mentioned in that agreement ?


Asked on 8/06/09, 8:07 am

3 Answers from Attorneys
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

(1) C is to be mentioned as one of the partners whose investment is confined to the 'technology' being provided by him. It may be better if the "technology" is valued at "X" price and that price is mentioned as C's contribution towards capital of the business.

(2) Since the technology once provided may not be taken out unlike cash investments made by other partners, it may be stipulated in the agreement that C's share in the business losses, if any, shall be confined to his contribution towards technology provided.

The aforesaid two clauses may be appropriately incorporated in the "Partnership Agreement".

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Answered on 8/06/09, 8:15 am
RAJIV GUPTA (Cell: +91 9811284735) [email protected]

in case it is mentioned in the deed of partnership that C would not share the loss, then by no means A and B can compel C to share the losses. but A and B may carry forward the losses to next financial year in order to lower down the profit margins of C. it is better if C plugs all the loopholes.

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Answered on 8/06/09, 12:31 pm
Pranav Desai PD Legal & Associates

The partnership deed should clearly mention that C is only for profit.

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Answered on 8/07/09, 1:08 am


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