Compare the status of a minor in Joint Hindu Family Business with that in a partnership firm


By Harshvardhan, the Subject Matter Expert at Edumarz

Solution: Hindu Undivided Family (HUF) is governed by the Hindu Law and by the Hindu Succession Act, 1956. The basis of membership in the business is birth in a particular family and three successive generations can be members in the business. Therefore a minor automatically becomes a member. The business is controlled by the head of the family who is the eldest member and is called Karta. All members including minors have equal ownership right over the property of an ancestor and they are known as co-parceners. The liability of all members including minor coparceners except the Karta is limited to their share of the co-coparcenary property of the business. Minor coparceners have no control over the business.

The partnership is based on a legal contract between two persons who agree to share the profits or losses of a business carried on by them. As such a minor is incompetent to enter into a valid contract with others, he cannot become a partner in any firm. However, a minor can be admitted to the benefits of a partnership firm with the mutual consent of all other partners. In such cases, his liability will be limited to the extent of the capital contributed by him and in the firm. He will not be eligible to take an active part in the management of the firm. Thus, a minor can share only the profits and can not be asked to bear the losses. However, he can if he wishes, inspect the accounts of the firm. The status of minor changes when he attains majority. In fact, on attaining the majority, the minor has to decide whether he would like to become a partner in the firm. He has to give public notice of his decision within six months of attaining the majority. If he fails to do so, within the stipulated time, he will be treated as a full-fledged partner and will become liable to the debts of the firm to an unlimited extent, in the same way as other active partners are.

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