Multiple choice

A & B were partners for 16 years. A pays B a premium of Rs.5, 000/-. At the end of 8 years there is dispute between A & B and they declare dissolution.

  1. A can get back entire amount of the premium paid by him to B.

  2. A can get back a reasonable part of the premium.

  3. A can get back Rs.2,500/- from B.

  4. A cannot get back any amount of the premium paid by him.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When partners dissolve their partnership before the agreed term, the partner who paid premium for a longer term can recover a reasonable proportion of it. A paid for 16 years but dissolved after 8 years, so he deserves a reasonable refund of the premium. Section 51(2) of the Indian Partnership Act provides for adjustment of advance payments on dissolution.

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