Multiple choice

Which of the following statements is correct?

  1. Every partnership is based on mutual agency.

  2. Every agency is based on mutual partnership.

  3. Every agent is a partner.

  4. Every partner is a sleeping partner.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Section 6 of Indian Partnership Act defines that in determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be given to the real relation between the parties. Option (2) is incorrect: Agency is a contract between two persons, in which one person is Principal and other is Agent. Option (3) is incorrect: Every partner is an agent of firm defined u/s 18 of Indian Partnership Act. Option (4) is incorrect: Partners in a partnership firm may be active partner and sleeping partner both.

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