Effects of an unregistered partnership
(a) No partner can sue the firm or any other partner – a partner of an unregistered firm cannot sue the firm or any partner of the firm to enforce any right.
(b) No partner and the firm can sue third party – an unregistered firm and its partners cannot sue a third party to enforce any right.
(c) No right to counter claim or to claim set-off – an unregistered firm and its partner cannot claim set-off if the value of suit exceeds Rs. 100 by a third party. Set-off means a claim by a person to adjust/reduce the amount payable to the other party since the other party also owes to him.
(d) Arbitration proceedings – an unregistered firm is disable to ask for Equal treatment if it is sued by third party.
In case you have any query about partnership registration online contact us.
The following are outside the impact of effects of an unregistered partnership
(i) A third party can sue the unregistered firm and its partners.
(ii) A partner of an unregistered firm can claim/sue for share in the property of the dissolved firm.
(iii) The rights of a firm or its partners having no place of business in India.
(iv) The right of a unregistered firm to enforce a right arising otherwise then out of a contract.
(v) An unregistered firm and its partner can claim set-off if the value of suit does not exceed Rs. 100 by a third party.
Partnership registration is always advised to avoid these drawbacks of non-registration of partnership. It is safer as well as beneficial to register a partnership.
Partnership, as the name suggests, is a type of collaboration of two or more than two partners. These partners together set up a legal firm under one name.