Partnership and Business Law

Section 33(1) requires that expulsion must be in the partnership's interest (A), the partner must receive notice (B), and must be given a hearing opportunity (C). All three requirements must be met for the expulsion to be in good faith. This ensures fair and justified partner removal.

Partnerships MUST distribute profits per the partnership deed (binding agreement). Companies MAY distribute profits to shareholders - they can retain earnings for reinvestment. Option B correctly reflects this discretion. Companies are not required to distribute all profits like partnerships.

Garner v. Murray (1904) established that when a partner becomes insolvent, their capital deficiency is borne by solvent partners in proportion to their capital contributions. This is the 'Garner v. Murray rule' in partnership accounting. It doesn't relate to fiduciary duties, unlimited liability, or profit disclosures.

Registration of a partnership firm is NOT compulsory under the Indian Partnership Act, 1932. A firm can operate legally without registration. However, registration is desirable because an unregistered firm cannot enforce certain legal rights in court - it's a strategic protection, not a legal requirement.

C is not liable to D because C had properly retired from the firm and issued a public notice of retirement. Under partnership law, a retiring partner who gives public notice is protected from liability for subsequent firm debts. A's representation (holding C out as partner) doesn't override C's proper retirement procedure. D should have verified C's status before extending credit.

In partnership law, each partner acts as both an agent (can bind the firm through actions) and a principal (can be bound by other partners' actions). This dual relationship is fundamental to partnership and applies regardless of registration status. The statement correctly captures this essential characteristic of partnerships.

A partnership share cannot be transferred without unanimous consent of all partners because partnership is based on mutual confidence and personal relationships. Unlike company shares, partnership interests are not freely transferable. The transfer requires all partners' agreement as it fundamentally changes the partnership composition.

Under the Indian Partnership Act, 1932, registration of a partnership firm is complete when the application in prescribed form with prescribed fee and details is delivered to the Registrar of Firms (Section 58). The certificate of registration is merely conclusive evidence of registration, not the completing act. Option B correctly states that registration is complete upon delivery of the application, not upon issuance of the certificate or recording in the register.

Partners can be classified in various ways based on their involvement, liability exposure, and contributions. Active partners participate in business operations, sleeping partners contribute capital but don't participate, nominal partners lend their name without actual contribution or involvement. Other types include minor partners, partners by estoppel, and limited partners in LLPs. Option D correctly includes all these standard categories.

Under Indian Partnership Act, registration of a firm is optional, not compulsory. However, an unregistered firm cannot enforce certain rights in court. Registration provides legal benefits but is not mandatory for forming or operating a partnership.

Under Partnership Act, death of a partner ordinarily dissolves the partnership unless there is a contrary agreement. The firm ceases to exist as the original contractual relationship between the partners ends. Remaining partners may form a new firm if they wish.

A new partner is liable only for firm obligations incurred after joining the firm. They are not responsible for past debts or actions. Liability begins from the date of admission and continues while they remain a partner, but past obligations remain with previous partners.

Under Section 29 of Indian Partnership Act, a partner's interest in the firm is transferable property. This interest can be transferred by sale (selling the share), mortgage (using it as security), or charge (creating an encumbrance). The transferee gets right to profits but not management.

Under partnership law, a deceased partner's estate is only liable for obligations and acts of the firm that existed AT THE TIME of the partner's death. The estate cannot be held liable for new acts or obligations that arise after the partner's death, even if the partnership deed prevents dissolution. Option A is incorrect because it wrongly imposes liability on the estate for post-death acts. Options C and D are irrelevant - D committed murder, which is a criminal act outside the scope of partnership liability, and D's estate has no connection to the firm's business.

Under the Indian Partnership Act, 1932, a partnership is defined as a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The essential elements are: (1) an agreement, (2) between two or more persons, (3) to share profits of a business, and (4) carrying on of business. Option C correctly identifies that partnership requires an agreement between two or more persons. Options A, B, and D describe characteristics that agreements must have but are not the core definitional element of partnership itself.