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

Joint venture may also be described as

  1. consignment

  2. partnership at will

  3. temporary partnership

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

Joint venture is a temporary or particular partnership as the venture is closed as soon as it is completed. Consignment is the relation of principal and agent between consignor and consignee. Partnership at will is carried on regularly by the partners as per their will. It is not confined to a particular venture. In a sale contract, goods are sold by seller to buyer.

Multiple choice

Which of the following is an implied authority of a partner under the Indian Partnership Act?

  1. A partner can withdraw a suit or proceeding filed on behalf of a firm.

  2. A partner can enter into partnership on behalf of a firm.

  3. A partner can open a bank account on behalf of a firm in his own name.

  4. A partner can transfer immovable property belonging to the firm.

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

All the four acts of a partner require an expressed authority under partnership firm.

Multiple choice

Under the Partnership Act 1932, which of the following is not true regarding the theory of facet relocation?

  1. Change occurs in the constitution of the firm

  2. Continues to carry on business after the expiry of fixed term

  3. Carries out more undertakings

  4. Admits any liability in a suit against the firm

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

A partner in a partnership firm cannot admit any liability in a suit against firm without an expressed authority. Here it doesn’t fall under the concept of facet relocation.

Multiple choice

How many partners may be in a banking company?

  1. 10

  2. No. of partner may be decided by customer

  3. 15

  4. 20
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the Companies Act, 1956 (and updated in subsequent acts), the number of partners in a banking company is restricted to 10 to ensure stability and regulatory oversight.

Multiple choice

Which of the following is/are the correct way(s) of forming a joint venture company? a. Two parties can incorporate a company in India and the business of both parties can be transferred directly to the new company. b. The above two parties can subscribe to the shares of the joint venture company in agreed proportion, in cash, and start a new business. c. Promoter shareholder of an existing Indian company and another party may jointly collaborate to jointly carry on the business of that company.

  1. Only a

  2. Only b

  3. Only c

  4. Only a and b

  5. Only b and c
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

This is the correct answer as both these statements are correct.

Multiple choice

The rule in Clayton case becomes applicable in banking transactions in the following cases:

(a) when death of a customer takes place (b) when the partner retires (c) when the guarantor withdraws his guarantee (d) when the director of a company dies who has been operating the account

  1. (a), (b) and (c) only

  2. (b), (c) and (d) only

  3. (a), (c) and (d) only

  4. (a) to (d) all
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Appropriation of Clayton's Rule is in following cases:

  1. Death/Insolvency of borrower
  2. Death/Retirement/Insolvency of a partner in partnership firm
  3. Death of a guarantor of a Cash Credit/Overdraft Account
  4. Joint account
Multiple choice

A partnership firm of X, Y and Z has been adjudged insolvent and its loan account is showing a debit balance of Rs. 3 lac. Its partner Y is having a saving bank account in which there is balance of Rs. 1.50 lac.

  1. The balance in partner’s account cannot be utilised for payment of dues of an insolvent firm.

  2. The balance in partner’s personal account cannot be utilised as that balance belongs to official assignee.

  3. The balance in partner’s account can be utilised by exercising the right of set off sue to his joint and several liabilities.

  4. The balance can be utilised before it is objected to by the partner.

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

The balance in partner’s account can be utilised by exercising the right of set off sue to his joint and several liabilities.

Multiple choice

A joint venture company can be formed

a. by the transfer of a business to a new company by one party and the transfer of cash by the other. b. by both the parties subscribing to the shares in cash to an agreed ratio. c. when the promoter shareholder of an existing company collaborates with the other party through a cash payment for shares. d. when two parties share the business resources with each other.

  1. Both a and b

  2. Only a, b and c

  3. Only a, c and d

  4. Only a, b and d
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

This is the correct answer.