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

Which section of the Partnership Act lays down that where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, loss or injury is caused to any third party, the firm is liable to the same extent as the partner?

  1. Section 20

  2. Section 24

  3. Section 26

  4. Section 27

  5. Section 30
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Section 26 of the Indian Partnership Act provides liability of the firm for the wrongful acts of the partner.

Multiple choice

A salaried partner

  1. is not a partner

  2. is a partner

  3. could be a partner, depending upon the real relation between the partners

  4. is a partner recognised only in the English law

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

A salaried partner could be a partner, depending upon the real relation between the partners.

Multiple choice

Mark the incorrect statement.

  1. A partner can always enter into partnership on behalf of the firm.

  2. A partner can acquire immovable property on firm’s behalf.

  3. A partner can transfer immovable property on firm’s behalf.

  4. A partner can admit any liability in a suit or proceeding against the firm.

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

All the authorities mentioned above fall under the implied authority of a partner. In other words, it can be said that a partner has an authority to act on behalf of the firm.

Multiple choice

A person who is not a partner in any firm may under certain circumstances be liable for the debts as if he were a partner on the basis of the ‘doctrine of estoppel’ or ‘holding out’. Under which section of the Partnership Act is this laid down?

  1. Section 26

  2. Section 27

  3. Section 28

  4. Section 29

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

Doctrine of holding out or doctrine of estoppel is laid down under Section 28 of the Partnership Act.

Multiple choice

For an account and a share of profits of a dissolved partnership, the period of limitation is _______ from the date of dissolution.

  1. 2 years

  2. 3 years

  3. 12 years

  4. 30 years

  5. 6 months
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Option (1) is incorrect: No such provision Option (2) is correct: Under Article 5 of Limitation Act, the period of limitation for an account and a share of profits of a dissolved partnership is 3 years. Option (3) is incorrect: No such provision Option (4) is incorrect: No such provision 

Multiple choice

A partner of an unregistered firm can sue for ____ of the firm.

  1. goodwill

  2. share in property

  3. dissolution

  4. nothing
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The non-registration does not affect the following rights of a firm: (a) Suit for Dissolution (b) Right of an official receiver or official assignee (c) Right to Claim a set-off where the subject-matter of the suit does not exceed Rs. 100 in value.

Multiple choice

In which of the following cases, is the firm not bound by the act of the partner?

  1. When act is done by a partner or his agent on behalf of the firm.

  2. When act is done by a partner in the name of the firm.

  3. When act is done by a partner in any manner expressing or implying an intention to bind the firm.

  4. When act is done fraudulently or negligently.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Firm is not bound by the acts done fraudulently or negligently as a partner is doing fraud on his own behalf.

Multiple choice

Ram, Sham and Mohan are in partnership. Ram and Mohan are declared insolvent while Sham wants to continue the firm. Which of the following is true?

  1. Firm is also declared insolvent.

  2. Sham has to repay the debts of the firm.

  3. Firm is automatically dissolved, and hence Sham cannot continue.

  4. The court has to give order for dissolution.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When all the partners of a firm are declared insolvent, or all but one partner is insolvent, the firm is compulsarily dissolved.

Multiple choice

Which of the following is true?

  1. Partnership agreements are always implied.

  2. Partnership agreements are always expressed.

  3. Partnership agreements are implied and expressed.

  4. Partnership agreements are implied or expressed.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Partnership agreement may not be implied and expressed simultaneously. So, it may be implied or expressed.

Multiple choice

Viru, Yuvi and Rohit were partners in a firm. During the course of business, the firm ordered a Lathe Machine with Amrit Mechanicals Ltd. After the order was placed, but before machinery was delivered, Rohit expired. Thereafter, the remaining partners became insolvent, and the firm was unable to pay for the machine. Which of the following is true?

  1. Rohit's estate will be liable for the price of the machine.

  2. Rohit's estate will not be liable for the price of the machine.

  3. Amrit Mechanicals Ltd. will be liable for the price of the machine.

  4. Yuvi’s estate will be liable for the price of the machine.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Rohit's estate will not be liable for the price of the machine as order was not placed on personal behalf of Rohit.