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

Which of the following partners does not bind the firm by his acts?

  1. Active partner

  2. Dormant partner

  3. Nominal partner

  4. Sub-partner
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Sub partner is the partner of partner. He does not have mutual agency with any partner. Sleeping or dormant partner only invests the money. He is not known to public. Active partner actively participates in the business. Nominal partner gives his name to firm. All these can bind the firm by their acts.

Multiple choice

A new partner can be admitted as a partner

  1. with consent from majority of partners

  2. with consent from all the partners

  3. if he/she is a representative of old partner

  4. if he has purchased the old partner's shares
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A new partner can be admitted only if all the partners give consent to it.

Multiple choice

A partner may retire from the firm

  1. by consent of all partners.

  2. by giving notice in writing.

  3. as per terms of the agreement of partnership.

  4. by all of these provisions.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The partner can retire by any of these provisions.

Multiple choice

Which of the following is false?

  1. When a partner becomes insolvent, he ceases to be the partner of firm.

  2. A firm automatically dissolves in the absence of contrary contract.

  3. No public notice is required to be given for such act.

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

All of these are true.

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.