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

The relation of partners arises from

  1. status

  2. an agreement

  3. legal provisions

  4. mutual understanding
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The relation of partnership arises from mutual agreement between all the partners.

Multiple choice

A minor can be

  1. a promisor in an agreement

  2. a principal

  3. a partner in a newly formed firm with the consent of all the partners

  4. insolvent

  5. agent
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

A minor can be an agent, but his principal is bound by his acts.

Multiple choice

Which of the following is correct?

  1. A minor as a partner can participate in the management of firm.

  2. A minor as a partner can inspect the books of firm.

  3. A minor as partner can sue other partners for his share while remaining in the firm as partner.

  4. A minor as a partner has to leave the firm necessarily when he attains the age of majority.

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

All the options are incorrect.

Multiple choice

Assertion (A): When something of valuable nature is acquired by a partner in breach of his duty in good faith, it is taken to be acquired for the benefit of all the partners and has to be accounted for to the firm. Reason (R): Partnership is a trust.

  1. Both (A) and (R) are true and (R) is the correct explanation of (A).

  2. Both (A) and (R) are true but (R) is not the correct explanation of (A).

  3. (A) is true, but (R) is false.

  4. (A) is false, but (R) is true.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When something of valuable nature is acquired by a partner in breach of his duty in good faith, it is taken to be acquired for the benefit of all the partners and has to be accounted for to the firm. Partnership is not a trust. It is a contract.

Multiple choice

Which of these is not a method of joint venture?

  1. Joint bank method

  2. Memorandum method

  3. Columunar method

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 Joint Bank is a method of joint Venture where separate sets of books are maintained and Memorandum method is a method of Joint Venture where separate set of books is not maintained. There is no method of Joint venture called Columnar Method.

Multiple choice

Which of the following statements is true?

  1. There is no difference between joint venture and partnership

  2. Consignment and joint venture is same

  3. In case of joint venture, none of the act is applicable

  4. In case of joint venture, the number of related party is one only
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 There is no specific act governing Joint venture transactions.

Multiple choice

Articles of association is a concept of

  1. Partnership Act

  2. Negotiable Instruments Act

  3. Companies Act

  4. Indian Penal Code
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Articles of association is a concept of the Companies Act. 

Multiple choice

Which of the following is correct?

  1. The liability of partners of a firm is unlimited

  2. Generally the liability of a member of a company is limited but it can be unlimited

  3. The liability of partner of firm is same as a member of any company

  4. All of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Multiple choice

Implied authority of the partner does not empower him to

  1. open a bank account on behalf of the firm in his own name

  2. compromise or relinquish any claim or portion of a claim by the firm against an outsider

  3. both of the above

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Implied authority of a partner allows routine business acts but not extraordinary decisions. Opening a bank account in one's own name or compromising claims without specific authority exceed implied powers. Both options A and B correctly list acts outside implied authority.

Multiple choice

Compulsory Dissolution includes

  1. dissolution by the adjudication of all the partners or of all the partners but one as insolvent

  2. dissolution by the business of the firm becoming unlawful

  3. both (1) and (2)

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Compulsory dissolution occurs by operation of law, not partner choice. When all partners or all but one are adjudicated insolvent, or the business becomes unlawful, dissolution is mandatory. Option C correctly lists both compulsory grounds.

Multiple choice

The rights of a minor when admitted to the benefits of the partnership include

  1. right to share of the property and profits of the firm as may be agreed upon

  2. right to have access to and inspect and copy of the account of the firm

  3. right to cast his vote on the question of appointment of the managing partner

  4. (1) & (2) but not (3)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A minor admitted to partnership benefits can share profits/property and access/inspect firm accounts, but cannot vote on management decisions like appointing managing partners. Option D correctly combines these two rights while excluding the voting right.