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

Match the following:

 
List - I List - II
i. Liability for misappropriation by a partner a. Section 26
ii. Liability of a partner for torts b. Section 27
iii. Liability of a partner for holding out c. Section 28
iv. Doctrine of implied authority d. Sections 18 and 19 of a partner

  1. i - c, ii - d, iii - a, iv - b

  2. i - b, ii - a, iii - d, iv - c

  3. i - a, ii - b, iii - c, iv - d

  4. i - b, ii - a, iii - c, iv - d
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

i - b, ii - a, iii - c, iv - d

Multiple choice

Find the correct legal statement from following statements.

  1. Every partner is liable, severally with all the other partners and jointly, for all acts of the firm done while he is a partner.

  2. Every partner is liable, jointly with all the other partners and severally, for all acts of the firm done while he is a partner.

  3. Every partner is liable only for acts done by him as acts of the firm done while he is a partner.

  4. Sleeping partner is not liable for acts done by him as acts of the firm done while he is a partner.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (2) is correct: Section 25 of the Partnership Act states that every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.

Multiple choice

Which of the following is not an essential requisite for creating a partnership as per Section 4 of the Partnership Act?

  1. An agreement to carry on a business

  2. Sharing of profits

  3. Sharing of losses

  4. Business to be carried by all or any of them acting for all
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Option (3) is correct: Section 4 of Partnership Act states that partnership is 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. Sharing of losses is not an essential requisite under this section.

Multiple choice

Partnership is

  1. trust

  2. company

  3. mutual agency

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

Option (3) is correct: In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be given to the real relation between the parties as provided under Section 6 of the Act.

Multiple choice

Which of the following statements is correct?

  1. Every partnership is based on mutual agency.

  2. Every agency is based on mutual partnership.

  3. Every agent is a partner.

  4. Every partner is a sleeping partner.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option (1) is correct: Section 6 of Indian Partnership Act defines that in determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be given to the real relation between the parties. Option (2) is incorrect: Agency is a contract between two persons, in which one person is Principal and other is Agent. Option (3) is incorrect: Every partner is an agent of firm defined u/s 18 of Indian Partnership Act. Option (4) is incorrect: Partners in a partnership firm may be active partner and sleeping partner both.

Multiple choice

Partnership in which the partners do not fix any term and are free to break their relationship at their will is known as partnership at will. The statement is

  1. true

  2. false

  3. partly true

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

Option (1) is correct: Under Section 7 of the Partnership Act, where no provision is made by contract between the partners for the duration of their partnership or for the determination of their partnership, the partnership is partnership at will.

Multiple choice

The type of dissolution of the frim in the case of death of a partner is

  1. Contigent Dissolution

  2. Dissolution by Notice

  3. Dissolution by Agreement

  4. None of these

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

A firm is dissolved by contingent dissolution on the death of a partner as the death of a partner is happening of an event. Contingent dissolution is used to dissolve the firm in case of happening of an event like death of a partner, partner becoming insolvent etc.

Multiple choice

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

  1. To assign and share his interest in the firm to others without the consent of other partners

  2. To take part in the conduct and management of business

  3. To inspect and copy books of account and records of the firm

  4. To be indemnified for the expenses incurred
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Right answer because any partner cannot transfer his interest in the firm to others without the consent of other partners, because every partner is concerned with firm's profits and losses.

Multiple choice

The interest is transferable freely in

  1. Partnership

  2. Co-operative societies

  3. Joint Stock Company (public)

  4. Joint Stock company (public) and Co-operative societies both
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Right answer Because in joint-stock company, one can transfer freely his or her shares to others which is a public company. There is no restriction on transferring share to others in public company. One can sell his shares easily and freely and withdraw his membership from the company when he wishes to do so.

Multiple choice

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

  1. A firm cannot sue any of its partners

  2. It cannot enforce its claims against a third party in the court

  3. An outsider or third party can file a suit against an unregistered firm

  4. Partners cannot sue each other
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Right answer because if the firm is not registered a third party can sue the unregistered firm for its claim. So this is not a consequence ( result) of non-registration of a partnership firm, since third party is not related to it. The third party can sue the partnership firm for its claims, since there is no error on part of third party, if the firm is not registered.   

Multiple choice

According to the Partnership Act 1932, what is the maximum limit of partners?

  1. It is 10 in case of General Business.

  2. It is 20 in case of Banking Business.

  3. It is 10 in case of Banking and 20 in case of General Business.

  4. No Maximum Limit is Fixed by Partnership Act 1932.

  5. Maximum Number can be 50.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The maximum limit is fixed by the Companies Act 1956, and not by the Partnership Act 1932.

Multiple choice

Partnership comes into existence by

  1. an agreement

  2. status of partners

  3. process of Law

  4. without any agreement

  5. lawful business
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

An Agreement is required (written or implied) to form a partnership. Partnership comes into existence by an agreement.