Section 11 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 11 is the section that makes the partnership deed matter. It says that, subject to the Act, partners can fix their mutual rights and duties by contract, that the contract can be spoken or implied from how they deal with each other, and that it can be varied by the consent of all. It also lets the contract bar a partner from running any other business while he is a partner.
Subject to the provisions of the Act, the mutual rights and duties of the partners may be determined by contract between the partners, and that contract may be express or implied by a course of dealing (11(1)). It can be varied by the consent of all the partners, which may also be express or implied by a course of dealing. Under 11(2), despite section 27 of the Contract Act, the contract may provide that a partner shall not carry on any business other than that of the firm while he is a partner.
Section 11(1): the contract fixes the rights and duties
Section 11(1) has three parts.
| Part | What the text says |
|---|---|
| Starting point | Subject to the provisions of this Act, the mutual rights and duties of the partners of a firm may be determined by contract between the partners |
| Form of contract | The contract may be expressed or may be implied by a course of dealing |
| Variation | The contract may be varied by consent of all the partners, and the consent may be expressed or implied by a course of dealing |
"Subject to the provisions of this Act"
The partners' scope to vary is not unlimited. Where the Act itself lays down a rule that is not made "subject to contract between the partners", the contract cannot override it. As we saw in sections 9 and 10, the general duties of good faith and the fraud indemnity are not introduced with those words. By contrast, sections 12, 13, 14, 15, 16 and 17 each begin "subject to contract between the partners", so the partnership deed can replace the default rules in those sections.
Express contract
An express contract is one stated in words, usually a written partnership deed. It can cover capital, profit ratio, interest, salary, roles, decision-making and exits. For the point-by-point defaults a deed can change, see section 12 on running the business and section 13 on money rights.
Implied by a course of dealing
The text also accepts a contract implied by a course of dealing. That means partners may be bound by the way they have actually behaved over time, even with nothing in writing on a particular point. The text does not say how long the pattern must continue or how consistent it must be; it states only the principle.
Example. Gita and Harsh have no clause on salary. For three years, both have drawn Rs 20,000 a month and recorded it in the books without objection. Their repeated dealing may show an implied term, depending on all the facts.
Variation by consent of all
Once a contract exists, it can be changed, but only with the consent of all the partners. The text does not accept the consent of a majority for this purpose. Consent, like the contract itself, can be express (a signed supplementary deed) or implied by a course of dealing (for example, the whole firm accepting a changed profit ratio year after year). To put changes into proper form, see our service on changes in agreement between partners and our guide on supplementary deeds.
Section 11(2): agreements in restraint of trade
Section 11(2) says: notwithstanding anything contained in section 27 of the Indian Contract Act, 1872, such contracts may provide that a partner shall not carry on any business other than that of the firm while he is a partner.
| Element | What the text says |
|---|---|
| Relationship to the Contract Act | Operates despite section 27 of the Contract Act |
| Permitted term | A partner shall not carry on any business other than that of the firm |
| Period | While he is a partner |
Points to note:
- It is permissive. The text says the contract "may provide". Without such a clause in the contract, section 11(2) does not itself stop a partner from running another business. A separate provision, section 16(b), deals with a partner who carries on a competing business of the same nature; see sections 16 and 17.
- Only while he is a partner. Section 11(2) covers the period of partnership. What can be agreed about the time after a partner leaves is dealt with in later sections on outgoing partners, for example sections 35 and 36.
- Link with section 3. Section 3 brings the Contract Act into the firm's affairs unless inconsistent with an express provision of the Partnership Act. Section 11(2) is one such express provision; see sections 1–3.
Example. Imran and Jyoti are partners in a coaching institute. Their deed says neither will run any other coaching business while a partner. Because of section 11(2), the clause is not defeated by section 27 of the Contract Act.
What can and cannot be changed
| Matter | Can the deed change it? |
|---|---|
| Rights and duties covered by sections 12 to 17 | Yes, each begins "subject to contract between the partners" |
| Section 9 duties and section 10 fraud indemnity | No such opening in the text; check before drafting around them |
| Bar on other business | The contract may provide for it (11(2)) |
| Variation of the deed | Needs the consent of all the partners |
Practical points
- Write it down. An implied term depends on proof of a course of dealing; a written clause avoids that argument.
- Record changes as a supplementary deed signed by all.
- Say so expressly if you want a bar on outside business.
Need help with your partnership deed?
Section 11 is the reason a well-drafted deed protects you. If your firm runs on handshake terms or an old deed, our team can prepare or update your partnership deed so that profit ratios, roles and the bar on outside business are clearly agreed.
Key takeaways
- Partners fix mutual rights and duties by contract, subject to the provisions of the Act (11(1)).
- The contract and consent to vary it can be express or implied by a course of dealing.
- Variation needs the consent of all the partners.
- Section 11(2) allows the contract to bar a partner from other business while he is a partner, despite section 27 of the Contract Act.
- Sections 12 to 17 are expressly subject to contract; sections 9 and 10 carry no such words.
Read next
- Sections 9 and 10: general duties of partners and indemnity for fraud
- Section 12: the conduct of the business
- Section 13: mutual rights and liabilities of partners
- Amendment to partnership deed: supplementary deed
Disclaimer: Based on the text of the Indian Partnership Act, 1932 as consulted on 1 October 2026. Several States have amended the registration chapter and make their own rules, forms and fees for the Registrar of Firms. This article is general information, not legal advice; check the official text and your State's rules before acting.