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Partnership and Business Law

1,019 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

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. 

Multiple choice

Where a partner in a firm is adjudicated an insolvent,

  1. he does not cease to be a partner

  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. Both (1) and (2)

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under section 34 of Partnership Act, where a partner in a firm is adjudicated, 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.

Multiple choice

Mode(s) of dissolution of a firm is/are

  1. compulsory dissolution

  2. dissolution by notice of partnership at will

  3. dissolution on the happening of certain contingencies

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

Modes of dissolution of a firm are as follows: a) Compulsory dissolution under section 41 b) Dissolution by notice of partnership at will under section 43 c) Dissolution on the happening of certain contingencies under section 42   

Multiple choice

Subject to contract between the partners, a firm is dissolved

  1. if constituted for a fixed term, by the expiry of that term

  2. if constituted to carry out one or more adventures or undertakings by completion thereof

  3. by the adjudication of a partner as an insolvent

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

Section 42 of the Partnership Act states dissolution on the happening of certain contingencies. Subject to contract between the partners, a firm is dissolved a) if constituted for a fixed term, by the expiry of that term, b) if constituted to carry out one or more adventures or undertakings by the completion thereof, c) by the death of a partner, and d) by the adjudication of a partner as an insolvent.

Multiple choice

What is the meaning of the term limited liability partnership?

  1. Limited scope of partnership

  2. Unlimited liability of a partner

  3. Limited liability of some partners

  4. Limited number of partners

  5. Unlimited number of partners
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A limited liability partnership is a partnership in which some or all partners have limited liabilities. A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnership. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. In an LLP, some partners have a form of limiled liability similar to that of the shareholders of a corporation.

Multiple choice

Which of the following statements is definitely not true when there is no partnership deed?

  1. The working partners are not entitled to any salary, commission etc.

  2. The partners will get profit in their capital ratio.

  3. The partners will get interest on advances @ 6% p.a.

  4. No interest will be allowed/charged on capital and drawings of partners.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This statement is definitely not true. In the absence of any deed, the profits are divided equally.