1. Regulating law:
A partnership is governed by the provisions of the Indian Partnership Act, 1932. A joint Hindu family business is governed by the principles of Hindu law.
2. Mode of creation:
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A partnership arises out of a contract, whereas a joint Hindu family business arises by the operation of law and is not the result of a contract.
3. Admission of new members:
In a partnership no new partner is admitted without the consent of all the partners, while in the case of a joint Hindu family firm a new member is admitted just by birth.
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4. The position of females:
In a partnership women can be full-fledged partners, while in a joint Hindu family business membership is restricted to male members only. After the passage of the Hindu Succession Act, 1956, females get only co-sharer’s interest at the death of a coparcener and they do not become coparceners themselves.
5. Number of members:
In partnership the maximum limit of partners is 10 for banking business and 20 for any other business but there is no such maximum limit of members in the case of joint Hindu family business.
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6. Authority of members:
In partnership each partner has an implied authority to bind his co-partners by act done in the ordinary course of the business, there being mutual agency between various partners.
In a joint family business all the powers are vested in the ‘Karta’ and he is the only representative of the family who can contract debts or bind his coparceners by acts done in the ordinary course of business, there being no mutual agency between various coparceners.
But a coparcener other than the ‘Karta’ of the family may be authorised expressly or by implication to contract debts on behalf of the firm (Lai Chand vs. Ghanayalal).
7. Liability of members:
In partnership, the liability of the partners is joint and several as well as unlimited. In other words, each partner is personally and jointly liable to an unlimited extent and if partnership liabilities cannot be fully discharged out of the partnership property each partner’s separate personal property is liable for the debts of the firm.
In a joint Hindu family business only the ‘Karta’ is personally liable to an unlimited extent, i.e., his self-acquired or other separate property besides his share in the joint family property is liable, for debts contracted on behalf of the family business.
Other coparceners’ liability is limited to the extent of their interest in the joint family property and they do not incur any personal liability.
But an adult coparcener can be made personally liable if he is also, expressly or impliedly, a party to the contract or if he has subsequently ratified and accepted the transaction out of which the obligation of the creditor arose (Lai Chand vs. Ghanayalal).
8. Right of members to share in profits:
In a partnership each partner is entitled to claim his separate share of profits but a member of a joint Hindu family business has no such right. His only remedy lies in a suit for partition.
9. Effect of death of a member:
A partnership, subject to contract between the partners, is dissolved on the death of a partner, but a joint Hindu family firm is not dissolved on the death of a coparcener (Baij Nath vs. Ram Gopal).