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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

A partnership firm is compulsorily dissolved when

  1. all the partners give their consent

  2. all the partners except one have become insolvent

  3. the business of the firm becomes illegal

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

In all the given cases, a partnership firm gets compulsorily dissolved.

Multiple choice

________ is the essential feature for formation of partnership.

  1. Agreement

  2. Memorandum

  3. Relation

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

Existence of an agreement is essential of partnership. Such an agreement between the partners may be express or implied. Further, the agreement should be valid and must be for a lawful object, purpose and between the persons competent to contract.

Multiple choice

Which of the following is not a right of a minor partner?

  1. To inspect the books

  2. To sue the other partners without leaving the firm

  3. To share the partnership property

  4. To become or not to become a partner on attaining majority
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (2) is correct: As long as a minor is a partner, he cannot sue the other partners.

Multiple choice

In which of the following cases does insurable interest not exist?

  1. Spouse

  2. Business partner

  3. Tenant

  4. Self
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This principle is an important element within a contract of insurance. It means that the insured must have an interest in the subject matter of the insurance. In a practical sense, this means that the insured must suffer a financial or economic loss. This also means that the interest in the property must be a real one and not a contrived one. Tenant is a person who occupies land or property rented from a landlord. So, 'insurable interest' does not lie with the person.

Multiple choice

Two existing companies are combined to create a new company with both of them losing their identity. It is called a/an

  1. alliance

  2. amalgamation

  3. consolidation

  4. merger
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Consolidation is the joining of several business units or several different companies into a larger organisation. Business consolidation is used to improve operational efficiency by reducing redundant personnel and processes. It is most often associated with mergers and acquisitions. Business consolidation can result in long-term cost savings. In the short-term, it can be expensive and complex.

Multiple choice

In the absence of custom of trade to the contrary, the implied authority of a partner does not empower him to

(a) submit a dispute relating to the business of the firm to arbitration (b) compromise or relinquish any claim or portion of a claim by the firm (c) acquire immovable property on behalf of the firm

  1. Only (a) and (b)

  2. Only (b) and (c)

  3. Only (a) and (c)

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

In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to

(a) submit a dispute relating to the business of the firm to arbitration

(b) open a bank account on behalf of the firm in his own name

(c) compromise or relinquish any claim or portion of a claim by the firm

(d) withdraw a suit or proceeding filed on behalf of the firm

(e) admit any liability in a suit or proceeding against the firm

(f) acquire immovable property on behalf of the firm

(g) transfer immovable property belonging to the firm

(h) enter into partnership on behalf of the firm

Multiple choice

Which of the following is not an essential feature of a mandate?

  1. It is given on a simple paper.

  2. It does not require registration with any government authority.

  3. In joint accounts and in partnership, it should be signed by all account holders/all partners.

  4. It should be properly stamped.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Mandate is an unstamped letter that is signed by a customer, authorising him to operate the account on his behalf. Thus, option 4 is the correct answer. 

Multiple choice

Where a minor is admitted for benefit in a partnership firm and he attains majority and decides to join the firm as partner, his liability begins from the

  1. date of his majority

  2. date of his decision to join the firm

  3. date of information to him that he was admitted for benefits

  4. date when he was admitted for benefits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

At any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later, such person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position regarding the firm.

Multiple choice

Operation in a current account in the name a firm can be allowed in which of the following circumstances?

  1. If one of the partners has become insolvent.

  2. If one of the partners has given instructions to stop payment while others agree for operations.

  3. If one of the partners has died and the remaining partners want the operations for winding up the business.

  4. If number of partners has reached 21 due to two minors that have decided to become partners after attaining majority.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If one of the partners has died and the remaining partners want the operations for winding up the business.

Multiple choice

B requested the bank for garnishee order for A, who has a partnership account. What all can be attached in that case?

  1. The order will attach accounts of all the partners.

  2. The order will not attach any account.

  3. The order will attach personal account of the partner A.

  4. Any of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In case of partnership accounts, the personal accounts of the partners can be attached in addition to the account of the firm. But, reverse is not possible. 

Multiple choice

Which of the following actions can be considered an action of a partner that would bind other partners?

  1. Acknowledgement of debt already obtained by the firm

  2. Opening a bank account of the firm, in his own name

  3. Giving a mandate to allow another person to operate the account

  4. To sell the immovable property relating to the firm
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Acknowledgement of debt already obtained by the firm can be considered an action of a partner that would bind other partners under Limitation Act, 1963.

Multiple choice

In a joint account in the name of X and Y, a request is received to substitute the name of X by Z. Later on, another request comes from Y and Z either to replace the name of Y with A or add the name of A. Which of the following is not correct?

  1. Request of X and Y can be accepted.

  2. Request of Y and Z to replace the name of Y with that of A can be accepted.

  3. Request of Y and Z to add the name of A can be accepted.

  4. While changing the name, it has to be ensured that at least one of the original account holders should continue in the account.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

At least one of the original account holders needs to stay. Both can't be replaced.