Rules in which the partners are free to choose any name for the firm are given below:
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’ (Sec. 4).
ADVERTISEMENTS:
A ‘firm’ is not a separate legal entity distinct from its members. It is merely a collective name of the individuals composing it. Hence, unlike a company which is a separate legal entity distinct from its members, a firm cannot possess property or employ servants; neither can it be a debtor nor a creditor.
It cannot sue or be sued by others. It is only for the sake of convenience that in commercial usage terms like ‘firm’s property,’ ’employee of the firm,’ ‘suit against the firm’ and so on are used, but in the eye of law that simply means ‘property of the partners,’ ’employee of the partners’ and ‘a suit against the partners’ of that firm.
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It is relevant to state that for the purposes of the Income Tax Act, a partnership firm is an entity quite distinct from the partners composing it and is assessable separately.
The partners are free to choose any name for the firm subject to the following rules:
ADVERTISEMENTS:
1. The name must not be too identical or similar to the name of another existing firm doing similar business so as to lead to confusion (Havana Cigars Factories Ltd. Vs. Oddenino). The reason for this rule being that the reputation or goodwill of a firm may be injured, if a new firm could adopt an allied name.
2. The name must not contain words like Crown, Emperor, Empress, Empire, Imperial, King, Queen, Royal, or words expressing or implying the sanction, approval or patronage of Government except when the State Government signifies its consent to the use of such words as part of the firm name by order in writing [Sec. 58(3)].