Law Legal Studies · Commerce Accountancy

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

If a minor elects to becomes partner after attaining majority, he will be liable for the debts of the firm

  1. from the date of admission as a minor partner

  2. from the date of attaining majority

  3. from the date of his notice to the public that he elects to become partner

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

Option (1) is correct: U/s 30 of Indian Partnership Act, if a minor elects to becomes partner after attaining majority, he will be liable for the debts of the firm from the date of admission as a minor partner.

Multiple choice

Profits of a partnership firm must be distributed among the partners as per the partnership deed, while the profits of a company

  1. must be distributed to its shareholders

  2. may or may not be distributed to its shareholders

  3. may or may not be distributed to its board of directors, shareholders and other stakeholders

  4. are not distributable at all
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (2) is correct: It is not an obligation for the company to distribute profits among the shareholders.

Multiple choice

Which of the following is/are essential feature(s) of partnership?

  1. Registration

  2. Partnership deed

  3. Test of mutual agency

  4. Separate legal entity

  5. All of the above

Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Option (1) is incorrect: Registration is optional for partnership. Option (2) is incorrect: A partnership may come into existence without writing partnership deed. Option (3) is correct: Mutual agency is required to determine the partnership. Mutual agency is the legal relationship between partners in a partnership, where each partner has authorisation powers and the ability to enter the partnership into business contracts. Option (4) is incorrect: Partnership is not a separate legal entity from its partners.

Multiple choice

Which of the following is/are not true regarding the rights of a minor partner?

  1. He has right to share of the property and profits of the firm as may have been agreed upon.

  2. He has right to have access to and inspect and copy books of the firm.

  3. He has right to have access to and inspect and copy any of accounts.

  4. All of the above

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

Option (2) is correct: A minor cannot inspect and copy any book except account books.

Multiple choice

A partnership agreement may be

  1. expressed or implied

  2. written only

  3. oral only

  4. implied only

  5. expressed only
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Express contracts are the contracts in which all the elements of contract are clearly written and implied contracts are the contracts in which circumstances cause contract, but nothing in written.

Multiple choice

A partner may be expelled from partnership subject to which of the following conditions?

  1. The power of expulsion of a partner should be conferred by the contract between the partners.

  2. The power should be exercised by majority of the partners.

  3. The power should be exercised in good faith.

  4. All of the above

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

Option (4) is correct: In all the above conditions, a partner may be expelled from partnership.

Multiple choice

A new partner is held liable for all acts of the firm done

  1. before he becomes a partner

  2. after he becomes a partner

  3. any time after even if he ceases to be a partner and up to his death

  4. before or after he becomes a partner

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

Option (2) is correct: A person can be held liable for the acts only after he becomes a partner.

Multiple choice

Every partner has the right

  1. to take part in the business of the firm

  2. to share exclusive profits

  3. to use the property of the firm for personal purpose

  4. All of the above

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

Option (1) is correct: U/s 12 of the act, every partner has the right to take part in the business of the firm, but they cannot use firm's property for personal use and cannot share exclusive profits.

Multiple choice

A partner can retire

  1. at the age of superannuation

  2. at the low ebb of capital a/c

  3. in accordance with the partnership deed

  4. when a nominee becomes a partner

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

Option (3) is correct: A partner can retire from the firm according to the partnership deed.

Multiple choice

_____ does not relate to the dissolution of firm.

  1. Dissolution by agreement

  2. Compulsory dissolution

  3. Dissolution in the happening of certain contingency

  4. Dissolution by leaving insolvent partner

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

Option (4) is correct: Leaving of firm by insolvent partner doesn’t result into dissolution of firm.

Multiple choice

On dissolution, the partners remain liable till

  1. the accounts are settled

  2. partners' dues are paid off

  3. a public notice is given

  4. the registrar strikes off the name

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

Option (3) is correct: On dissolution, the partners remain liable till a public notice is given by the outgoing partner or by the firm.

Multiple choice

Death of a partner has the effect of

  1. dissolving the firm

  2. continuance of the business of the firm

  3. his heirs joining the firm

  4. computation of profits up to the date of death

  5. All of above

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: If any partner dies, it results in dissolution of the firm.