Difference Between Partnership and Hindu Undivided Family

Hindu Undivided Family carrying on a family business are not partners in the sense that their relationship inter it is not governed by the Partnership Act, 1932, but the Hindu Law while deciding joint ownership in the family business. The only substantial resemblance between the two forms of association seems to be that in each case the members carry on business together. In all other respects, they are wholly dissimilar.

Difference Between Partnership and Hindu Undivided Family in Tabular Form:

Hindu Undivided Family

Distinction Partnership Hindu Undivided Family
1. Regulating Law A partnership is governed by the provisions of the partnership Act,1932. A joint Hindu family business is governed by the principles of Hindu law.
2. Creation It arises from an agreement. It arises by status or operation of law.
3. Name of the Persons Involved The persons who form partnerships are called ‘Partners’. The persons who are the members of the HUF are called ‘Coparceners’.
4. Admission of new Members No new partners are admitted without the consent of all the partners. A new member is admitted just by birth.
5. Death Death of a partner ordinarily leads to the dissolution of the partnership. Death of a member in the HUF does not give rise to the dissolution of the family business.
6. Management All the partners are equally entitled to take part in the partnership business. The right of management of the Joint family business generally vests in Karta, the governing male members of the family.
7. Number of Members In a partnership, the maximum limit of partners is 10 for banking business and 20 for any other business. There is no maximum limit of members in the case of joint HUF business.
8. Right of Share profits In a partnership, each partner is entitled to claim his separate share of profits. A member of a joint HUF business has no such right. His only remedy lies in a suit for partition.
9. Authority of Bind the Firm Every partner can, by his act, bind the firm. The ‘Karta’ or the manager has the authority to contract for the family business.
10. Liability The liability of a partner is unlimited. The liability of the Karta is unlimited, and the other coparceners are liable only to the extent of their share in the profits of the family business unless they take part in the act performed or transactions entered into by the Karta.
11. Minor’s Capacity A minor cannot a partner, though he can acquire benefits of partnership, only with the consents of all the partners.  A minor becomes a member of the ancestral business by the incidence of birth. He does not have to wait for attaining the majority.
12. Continuity A firm subject to a contract between the partners gets dissolved by the death or insolvency of a partner. A HUF has continuity until it is divided. The status of HUF is not thereby affected by the death of a member.