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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 elements of business partnership 1 - meaning, definition, characteristics and kinds types of partnership types of partnerships dissolution of partnership

Which of the following are the conditions needed to prove an act of a partner is an act of a partnership firm?

  1. Such an act be done in a ordinary course of a partnership firm

  2. It must be related to the business of the firm

  3. Act must have been done in the name and on behalf of the firm

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Every act of the partners must be done according and related to the firm. Partner is an agent of the firm and his other partners for the purpose of the business of the partnership, and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, so it should be done according to the business. An act or instrument relating to the business of the firm done or executed in the firm name, or in any other manner showing an intention to bind the firm, by any person there to authorised, whether a partner or not, is binding on the firm and all the partners.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Dinesh becomes a partner in the firm by agreement but never takes active part in the conduct of the business of the firm, in this situation he is known as a ________.

  1. Dormant Partner

  2. Nominal Partner

  3. Sub-partner

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

A dormant or sleeping partner is one who contributes capital and shares profits but does not participate in the daily management of the firm.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Which of the following statements is true?

  1. Two or more companies cannot enter into a contract of partnership

  2. Two or more partnership firms can enter into a new contract of partnership

  3. A married woman can be a partner of her husband

  4. Two or more Joint Hindu Families cannot enter into a contract of partnership
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Under partnership law, a married woman can enter into a partnership agreement with her husband, as they are separate legal entities in the context of contract law.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Balu, Lalu and Kalu are partners in a firm. They admit Malu as a minor partner to the benefit of partnership. Within 6 months of his attaining majority, he fails to give a public notice of his intention that he has become a fullfledged partner. On the other hand all other partners refuse to take him as a partner. In this case, which of the following statement is correct ?

  1. Malu is not liable as a partner

  2. Malu can become a partner

  3. Public notice is not essential for a minor partner on attaining majority

  4. A suit may be filed by other partners for dissolution of the firm
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If a minor who has attained majority fails to give public notice of their intention to leave the firm, they are deemed to have become a partner by default.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Following persons can not be called partners ____________________.

  1. Minors

  2. Insolvents

  3. Co-owners without the agreement to carry in the business

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Partnership requires a valid agreement between competent persons to carry on a business. Minors, insolvents, and co-owners without an agreement to trade do not meet these criteria.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

At the time when a new partner enters, goodwill   __________________.

  1. belongs all partners, new and old

  2. belongs only to the new partner who is going to be admitted

  3. belongs only to the old partner who have credited it

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

Goodwill represents the past efforts of existing partners; therefore, upon the admission of a new partner, the existing goodwill belongs to the old partners who built it.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A _________  partner is like an disclosed principal.

  1. sleeping

  2. active

  3. nominal

  4. sub-partner
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A sleeping (dormant) partner is liable to third parties for the debts of the firm, similar to an undisclosed principal in agency law.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A sub-partner is a person ____________.

  1. who is sharing the profits of some partner

  2. who does not invest and shares the profits

  3. who invests but does not work

  4. who only gives his name for partnership
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A sub-partner is a person who contracts with an existing partner to share in that partner's share of the firm's profits.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

XYZ partnership firm is a partnership firm between A and B. C posed that he is a partner in XYZ and earned profits from the market. C will be regarded as ______________.

  1. holding out partner

  2. dormant partner

  3. nominal partner

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

If a person represents themselves as a partner to third parties to gain credit or profit, they are a 'partner by estoppel' or 'holding out' partner. Since this option is missing, 'none of the above' is the correct choice.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Minor may be admitted in the firm for ________.

  1. sharing of profits

  2. mutually benefit

  3. both (a) and (b)

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

Under the Indian Partnership Act, a minor can be admitted to the benefits of a partnership only for profit-sharing purposes. The minor's liability is limited to their share in the firm's assets. The admission cannot be for mutual benefit broadly, but specifically for sharing in the firm's profits. This protects the minor while allowing them to participate in partnership income.

Multiple choice business organisation and correspondence partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

Which one of the following can not be claimed as a matter of right by a partner?

  1. To have access to books of account

  2. To take part in the conduct of the business

  3. To share the profits

  4. To receive remuneration
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Partners have a right to share profits, access books, and participate in business, but they are not entitled to remuneration unless specifically agreed upon in the partnership deed.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A sub-partner is a person ___________.

  1. who is sharing the profits of some partner.

  2. who does not invest and shares the profits

  3. who invests but does not work

  4. a partner who only gives his name for partnership
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A sub-partner is someone who agrees to share the profits of a specific partner in the firm.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A Minor in a Partnership is _________.

  1. personally liable

  2. having unlimited liability

  3. liable only when the firm is insolvent

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

A minor admitted to the benefits of a partnership is not personally liable for the firm's debts; their liability is limited to their share in the firm's assets.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A Partner who has not entered into a Partnership agreement and conducts or represents himself as a Partner in a Firm is called _________.

  1. sleeping partner

  2. partner by estoppel

  3. working partner

  4. sub-partner.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A person who represents themselves as a partner, even without a formal agreement, is a partner by estoppel.

Multiple choice elements of business partnership 2 - organisation, classification, rights, duties and liabilities of partners types of partners types of partners and partnership firms types, rights and duties of partners

A person who represents himself to be a partner but in reality he is not so, is known as a __________.

  1. inactive partner

  2. partner by estoppel

  3. Partner by default

  4. legal partner
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A person who holds themselves out as a partner to others is known as a partner by estoppel.