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Law Dictionary Home Dictionary Definition firm

Firm, a firm is not a legal entity. It is only a collective or compendious name for all the partners. In other words, a firm does not have any existence away from its partners. A decree in favour of or against a firm in the name of the firm has the same effect as a decree in favour of or against the partners. While the firm is incurring a liability it can be assumed that all the partners were incurring that liability and so the partners remain liable jointly and severally for all the acts of the firm. This principle cannot be stretched and extended to such situations in which the firm is deemed to be a person and hence a legal entity for certain purpose, Dena Bank v. Bhikhabhai Prabhudas Parekh, (2000) 5 SCC 694: AIR 2000 SC 3654 (3660). The name of style under which any business is established. 'Partners who have entered in partnership with one another are' for the purposes of the Partnership Act (see PARTNERSHIP) called collectively a firm, and the name under which their business is carried on is called the 'firm-name' (Partnership Act, 1890, s. 3). Partners may sue or be sued in the name of their firm, but if suing must disclose names on demand. See R.S.C., Order XLVIIIA. But a partnership firm is not a person in law, see Re Smith, (1914) 1 Ch 948, per Joyce, J., and the instances there given by the learned judge of the effect of a legacy or an assurance to a firm. See BUSINESS NAMES. The title under which one or more persons conduct business jointly. Black's Law Dictionary, 7th Edn. Persons who have entered into partnership with one another are called individually 'partners' and collectively 'a firm', and the name under which their business is carried on is called the 'firm name', Dulichand Laxminarayan v. Commissioner of Income Tax, AIR 1956 SC 354: 1956 SCR 154. (ii) 'Firm' is defined in s. 2(9) of the U.P. Agriculture Income-tax Act,1948 as having the same meaning assigned to it in the Indian Partnership Act, 1932. S. 4 of the Indian Partnership Act, 1932, states that 'Persons who have entered into partnership with one another' are called individual 'partners' and collectively a firm and the name under which their business is carried on is called the 'firm name'. It may be noted that by the definition the word 'person' means an individual and includes a firm or a company, State of Uttar Pradesh v. Buyland Sugar Co. Ltd., AIR 1979 SC 1104: (1979) 3 SCC 96: (1979) 3 SCR 419. (iii) 'Firm' is a collective noun, a compendious expression to designate an entity, not a person. In Income-tax law a firm is a unit of assessment, by special provisions, but is not a full person, Commissioner of Income Tax v. R.M. Chidambaram Pillai, AIR 1977 SC 489: (1977) 1 SCC 431: (1977) 2 SCR 111.

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