Chapter I - Preliminary
Section 2
Section 2: Definitions used in the Partnership Act
Section 2 defines terms used throughout the Partnership Act, including an act of a firm, business and third party.
On this page
Need advice on Section 2?
This article is for general information. Refer to the Indian Partnership Act, 1932 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
In this Act, unless there is anything repugnant in the subject or context,—
(a) an ‘act of a firm’ means any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm;
(b) ‘business’ includes every trade, occupation and profession;
(c) ‘prescribed’ means prescribed by rules made under this Act;
(d) ‘third party’, used in relation to a firm or to a partner therein, means any person who is not a partner in the firm; and
(e) expressions used but not defined in this Act and defined in the Indian Contract Act, 1872 (9 of 1872), shall have the meanings assigned to them in that Act.
Central rule and applicability
An act of a firm includes an act or omission by all partners, or a partner or agent, giving rise to a right enforceable by or against the firm. Business includes trade, occupation and profession. A third party is a person who is not a partner in the relevant firm, while prescribed refers to rules under this Act. Undefined expressions defined in the Contract Act take their meanings from that Act.
Limits and related provisions
Definitions operate unless the subject or context is repugnant to them. They do not by themselves decide that an individual had authority or that the firm is liable for every private act. The central definition list must be distinguished from additional definitions introduced by a particular state.
Hypothetical business example
Hypothetical: A consulting partnership receives a claim arising from an agent's omission. The adviser checks whether an enforceable right against the firm arises, then examines the separate authority and liability provisions rather than stopping at the definition of business.
Practical decision flow
Identify the term and the context in which the Act uses it.
For an act of a firm, identify the actor, act or omission and resulting enforceable right.
Check the relevant operative provision and any applicable state definition before drawing a liability conclusion.
Check the applicable state law
This guide explains the central Section 2 baseline. State amendments, notifications and rules can affect its application. Confirm the law applicable to the firm's location and the relevant partnership agreement before acting.
Practical checklist
Do
- Identify the term and the context in which the Act uses it.
- For an act of a firm, identify the actor, act or omission and resulting enforceable right.
- Check the relevant operative provision and any applicable state definition before drawing a liability conclusion.
Avoid
- Definitions operate unless the subject or context is repugnant to them. They do not by themselves decide that an individual had authority or that the firm is liable for every private act. The central definition list must be distinguished from additional definitions introduced by a particular state.
Glossary
- Third party
- A person who is not a partner in the relevant firm.
- Prescribed
- Prescribed by rules made under the Partnership Act.
Frequently asked questions
Does business include a profession?
Yes. The central definition includes every trade, occupation and profession.
Can an omission be an act of a firm?
Yes, where the definition's actor and enforceable-right conditions are met.
Where are otherwise undefined Contract Act expressions sourced?
Section 2 adopts their meanings from the Indian Contract Act where that Act defines them.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026