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Partnership and Business Law

1,007 Questions

Test your knowledge of partnership regulations and business law with these practice questions. The topics include the rights of minor partners, firm dissolution, retirement rules, and public notices. This material is crucial for law exams and legal studies.

Rights of minor partnersPublic notice requirementsFirm dissolution rulesPartner retirementHolding out partner principlePartnership deed provisions

Partnership and Business Law Questions

Multiple choice

In case of insolvency of a partner,

  1. no public notice is needed to terminate his liability

  2. he ceases to be a partner on the date on which the order of adjudication is made, whether or not the firm is thereby dissolved

  3. his position is different from that of a retired or expelled partner

  4. All of the above

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Public notice is not mandatory in case of insolvency of a partner. An insolvent partner ceases to be a partner and retired partner and insolvent partner are different in position. Hence, all are correct.

Multiple choice

Mark the incorrect statement.

  1. A minor cannot be made liable for losses.

  2. A guardian may accept the benefits of a partnership on behalf of a minor without his knowledge.

  3. A minor cannot inspect the books of accounts.

  4. A minor has the right to sue only for accounts and his share, and not for dissolution.

  5. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A minor in a partnership firm may have access to and inspect and copy any of the accounts of the firm. But he doesn’t have any right with regards to any other books of the partnership firm.

Multiple choice

According to Section 30 of the Partnership Act, “at any time within 6 months of his attaining majority or of obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, a minor can elect to become or not to become a partner”.

  1. Such option is exercised by giving a public notice.

  2. If he remains silent and fails to give such a notice, then there is a presumption that he wants to be a partner and on the expiry of the 6 months, he shall become a partner in the firm.

  3. If he did not exercise the option, then he will be deemed to become a partner in the firm.

  4. All of the above

  5. No public notice is required according to Section 30 of the Act.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If the minor gives a public notice, then his position will be decided according to the particulars of notice. Otherwise, he will be deemed a partner in the firm.

Multiple choice

Where a minor elects not to become a partner,

  1. his rights and liabilities shall continue to be those of a minor up to the date on which he gives a public notice

  2. his share shall not be liable for any acts of the firm done after the date of notice

  3. he shall be entitled to sue the partners for his share of the property and profits

  4. All of the above

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As provided in Section 30(8), a minor has all the above rights on attaining majority.

Multiple choice

Where a minor elects to become a partner,

  1. he becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of partnership

  2. he becomes personally liable to third parties for all the acts of the firm done since the date of his attaining majority

  3. he becomes personally liable to third parties for all the acts of the firm done since the date of his becoming a partner

  4. he does not become personally liable at all to third parties

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Where such person becomes a partner, his rights and liabilities as a minor continue up to the date on which he becomes a partner, but he also becomes personally liable to third parties for all the acts of the firm done since he was admitted to the benefits of partnership.

Multiple choice

Representation under Section 28 of the Partnership Act by a person to be a partner of a firm

  1. may be by words spoken or written or by conduct

  2. should be made by himself or knowingly permitted by him to be made by someone else

  3. should be in the knowledge of the person acting on its faith and believed by him to be true

  4. All of the above

  5. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The starting words of Section 28 state that any person, who, by words spoken or written or by conduct, represents himself or knowingly permits himself to be represented to be a partner in a firm is liable as a partner in that firm to anyone who has on the faith of any such representation given credit to the firm.

Multiple choice

Section 29 of the Partnership Act lays down the rights of the transferee of a partner’s interest. Which of the following is/are inclded in these rights?

  1. Right to be a partner in the firm

  2. Right to interfere in the conduct of the business of the firm

  3. Right to inspect the books of the firm

  4. Right to receive the share of profits of the transferring partner

  5. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A transferee is only entitled to receive the share of profits of the transferring partner and the transferee shall accept the account of profits agreed to by the partners.

Multiple choice

Which of the following is/are not the effect(s) of non-registration of a partnership firm?

  1. A person suing as a partner cannot sue the firm or co-partners.

  2. A partner cannot sue for dissolution of the firm or for accounts of a dissolved firm.

  3. The firm cannot sue a third party to enforce a right arising from a contract.

  4. The firm cannot claim a set off in a proceeding instituted against the firm.

  5. All of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Non-registration of a firm shall not affect the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realise the property of a dissolved firm.

Multiple choice

Mark the incorrect statement.

  1. For an effective registration, it is not necessary that the firm be a going concern at the time of registration.

  2. A firm may get registered at any time after the creation of partnership.

  3. There is no period of limitation either for the original registration or recording of subsequent changes.

  4. The registration under the Partnership Act involves only the registration of certain particulars as distinguished from the registration of a document under the Registration Act.

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An application for the registration of a partnership firm can be filed only after the commencement of a partnership business. While applying for the registration of a firm, it should be a going concern at the time of registration.

Multiple choice

An outgoing partner may carry on a business competing with that of the firm and he may advertise such business, but subject to contract to the company, he may not

  1. use the firm name

  2. represent himself as carrying on the business of the firm

  3. solicit the custom of persons who were dealing with the firm before he ceased to be a partner

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under Section 36 of the Partnership Act, an outgoing partner may carry on a business competing with that of the firm and he may advertise such business, but subject to contract to the company, he may not a) use the firm name, b) represent himself as carrying on the business of the firm, and c) solicit the custom of persons who were dealing with the firms before he ceased to be a partner.   

Multiple choice

Section 50 of Partnership act provides

  1. personal profits earned after dissolution

  2. return of premium on premature dissolution

  3. rights where partnership contract is rescinded for fraud or misrepresentation

  4. agreement of restraint of trade
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 50 of Partnership Act provides provisions for personal profits earned after dissolution.

Multiple choice

Which of the following matchings is/are wrong?

  1. Liability of estate of deceased partner — Section 35

  2. Right of outgoing partner to carry on competing business — Section 36

  3. Right of outgoing partner in certain cases to share subsequent profits — Section 38

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Liability of estate of deceased partner — Section 35 Right of outgoing partner to carry on competing business — Section 36 Right of outgoing partner in certain cases to share subsequent profits — Section 37

 

Multiple choice

Section 32 of Partnership Act provides

  1. retirement of a partner

  2. introduction of a partner

  3. insolvency of a partner

  4. liability of estate of a deceased partner
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Section 32 of Partnership Act provides provisions for retirement of a partner.

Multiple choice

A partner may retire

  1. with the consent of all the other partners

  2. in accordance with an express agreement by the partners

  3. where the partnership is at will, by giving notice in writing to all the partners of his intention to retire

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As provided under section 32 of the Partnership Act, a partner may retire with the consent of all the other partners; in accordance with an express agreement by the partners; where the partnership is at will, by giving notice in writing to all the partners of his intention to retire.