Law Legal Studies · Commerce Accountancy

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

The Indian Partnership Act, 1932

……………….is the relation between persons who have agreed to share the profits of a business carriedon by all or any of them acting for all.

  1. partnership

  2. firm

  3. co-operation

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

Section 4 of the Indian Partnership Act defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. This is the foundational definition.

Multiple choice

The Indian Partnership Act, 1932

Mutual rights and liabilities of partners are�

  1. a partner is not entitled to receive remuneration for taking part in the conduct of the business

  2. the partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm

  3. where a partner is entitled to interest on the capital subscribed by him and such interest shall be payable only out of profits

  4. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice

A businessman enters into an agreement with a Chartered Accountant to pay him fees and commission for the tax saved by so arranging the accounts as to conceal the true income of the business. Any dispute between the businessman and the Chartered Accountant on the fee and commission is to be settled by arbitration. The agreement is

  1. void

  2. voidable

  3. voidable in part

  4. void in part
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The object of the agreement is unlawful so where a businessman enters into an agreement with a Chartered Accountant to pay him fees and commission for the tax saved by so arranging the accounts as to conceal the true income of the business. Any dispute between the businessman and the Chartered Accountant on the fee and commission is to be settled by arbitration. The agreement is void. 

Multiple choice

Preliminary decree can be passed in a suit

  1. for partition

  2. of partnership

  3. for possession and mesne profit

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

Preliminary decree can be passed in a suit of partition, partnership, for possession and mesne profits.

Multiple choice

In a partnership, the liability of a partner is

  1. limited to shares in the partnership firm

  2. unlimited

  3. decided by the court

  4. decided by other partners
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (2) is correct: The liability of a partner is unlimited for all acts of the firm done, while he is a partner.

Multiple choice

The inclusion of a minor in a partnership firm

  1. may be admitted to the benefits of partnership with the consent of all the other partners

  2. may be admitted to the benefits of partnership with no consent of other partners

  3. may be admitted to the benefits of partnership with the consent of his parents

  4. may be admitted to the benefits of partnership with the guarantee of his parents
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: A person, who is a minor according to the law to which he is subject, may not be a partner in a firm, but with the consent of all the partners for the time being, he may be admitted to the benefits of partnership.

Multiple choice

A partner is

  1. not entitled to receive any remuneration

  2. entitled to receive remuneration with the consent of other partners

  3. entitled to receive remuneration by an order of the court

  4. entitled to receive remuneration
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Under Section 13 of the Partnership Act, a partner is not entitled to receive remuneration for taking part in the conduct of the business, but he has a share in the profits.

Multiple choice

When a partner in a firm is adjudicated insolvent, he

  1. ceases to be a partner

  2. does not cease to be a partner

  3. ceases to be a partner with the consent of all the other partners

  4. ceases to be a partner by an order of the court
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: When a partner in a firm is adjudicated insolvent, he ceases to be a partner.

Multiple choice

A, B, and C enter into a partnership agreement under which C is not liable for the losses. D filed a suit against A, B, and C. Examine the position of C.

  1. C is liable to D only.

  2. C is liable to D jointly with A and B.

  3. C is not liable to D.

  4. C is not liable to D jointly with A and B.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (2) is correct: C is not liable for losses, but if any person sues the partnership firm, then all the partners will be liable jointly.

Multiple choice

Which of the following is not a consequence of non-registration of a firm?

  1. No suit by an unregistered firm against a third party

  2. No suit by a partner against the firm for his rights

  3. A firm cannot set-off a claim

  4. Suit by a third party against the firm
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Option (4) is correct: A third party can file a suit against an unregistered firm for a breach in contract. However, all the other consequences are applicable to an unregistered firm.