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Partnership Act Test - 1

Description: Partnership Act Test 2
Number of Questions: 15
Created by:
Tags: Partnership Act Test 2 Partnership Law
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Which of the following is/are partner(s)?

  1. Members of HUF

  2. Burmese Buddhist husband and wife

  3. A minor and two majors

  4. Widow of deceased partner receiving annuity


Correct Option: C
Explanation:

Option (1) is incorrect: Members of HUF cannot be partners as per Sections 5 and 6. Option (2) is incorrect: Burmese Buddhist husband and wife cannot be partners as per Sections 5 and 6. Option (3) is correct: A minor can be partner if the other partners are major in a running business. All others mentioned cannot be partners as per Sections 5 and 6. Option (4) is incorrect: Widow of deceased partner receiving annuity cannot be partner as per Sections 5 and 6.

Types of partner include

  1. active partner

  2. sleeping partner

  3. nominal partner

  4. All of the above


Correct Option: D
Explanation:

Option (4) is correct: All are types of partners.

Who is/are bound by the acts done by the partners in name of the firm and in good faith?

  1. Firm

  2. Partners themselves

  3. Third Party

  4. None of these


Correct Option: A
Explanation:

Option (1) is correct: U/s 22 of the Act, in order to bind a firm, an act done by a partner or other person on behalf of the firm shall be done in the firm name or in any other manner expressing or implying an intention to bind the firm. Option (2) is incorrect: Partners are not bound by the acts done by the partners in name of the firm and in good faith. Option (3) is incorrect: Third party can never be bound by the acts done by the partners in name of the firm and in good faith.

Which of the following statements is true?

  1. Every partner cannot participate in the conduct of business.

  2. Every partner is bound to attend diligently to his duties in the conduct of business.

  3. Every partner can have access to inspect and copy only the books of accounts of firm.

  4. Even in the absence of any contract between the partners, a partner is entitled to receive remuneration for taking part in business.


Correct Option: B
Explanation:

Option (1) is incorrect: Under Section 12 of the Act, every partner can participate in the conduct of business subject to the contract between the partners. Option (2) is correct: Under Section 12 of the Act, every partner is bound to attend diligently to his duties in the company in the conduct of the business. Option (3) is incorrect: Under Section 12 of the Act, every partner does not have access to inspect and copy not only account books of the firm, he has right to have access to and to inspect and copy any of the books of the firm. Option (4) is incorrect: Under Section 13 of the Act, a partner is not entitled to receive remuneration for taking part in business subject to the contract between the partners.

True test of partnership is

  1. sharing of profits

  2. sharing of profits and losses

  3. mutual agency

  4. existence of an agreement to share profits of business


Correct Option: C
Explanation:

Option (1) is incorrect: Explanation 1 under Section 6 of the Partnership Act states that the sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property does not on its own make such persons partners. Option (2) is incorrect: Explanation 2 under Section 6 of the Partnership Act states the receipt by a person of a share of the profits of a business does not on its own make him a partner with the persons carrying on the business. Option (3) is correct: Under Section 6 of the Partnership Act, in determining whether a group of persons is or is not a firm or whether a person is or is not a partner in a firm, regard shall be given to the real relation between the parties. Option (4) is incorrect: No such agreement to share profits of business makes him a partner in the firm.

A new partner can be admitted in the firm with the consent of

  1. all the partners

  2. simple majority of partners

  3. special majority of partners

  4. new partner only


Correct Option: A
Explanation:

Option (1) is correct: U/s 31 of the Act, subject to contract between the partners, no person shall be introduced as a partner into a firm without the consent of all the existing partners.

On which of the following grounds may a partner apply to the court for dissolution of firm?

  1. Insanity of a partner

  2. Misconduct of a partner

  3. Perpetual losses in business

  4. All of the above


Correct Option: D
Explanation:

Option (4) is correct: Under Section 44 of the Partnership Act, either partner or court itself can ask for dissolution of firm in the following cases: Insanity of partner, incapacity of partner, misconduct of partner, continuous losses, and constant breach of agreement by partner.

A partnership at will is one where

  1. the duration is not fixed

  2. the duration is fixed

  3. it can be dissolved on the happening of an event

  4. None of these


Correct Option: A
Explanation:

Option (1) is correct: Section 7 of the Partnership Act states that where no provision is made by contract between the partners for the duration of their partnership or for the determination of their partnership, the partnership is partnership at will. Option (2) is incorrect: Duration is not fixed in the case of partnership at will. Option (3) is incorrect: It is a case of particular partnership.

Every partner is

  1. principal as well as an agent

  2. only agent of firm

  3. only representative of firm

  4. only co-partner of firm


Correct Option: B
Explanation:

Option (1) is incorrect: Partner is an agent of firm. Option (2) is correct: U/s 18 of the Act, a partner is an agent of firm for the purpose of business of the firm. Option (3) is incorrect: Partner is not the representative of firm. Option (4) is incorrect: Cannot be called co-partner of firm.

Dissolution by agreement is

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

  2. dissolution as a result of any agreement between all the partners

  3. dissolution by the business of the firm becoming unlawful

  4. All of the above


Correct Option: B
Explanation:

Option (1) is incorrect: It is not a dissolution by agreement. Option (2) is correct: U/s 40 of Partnership Act, a firm may be dissolved with the consent of all the partners or in accordance with a contract between the partners. Option (3) is incorrect: It is not a dissolution by agreement.

A minor partner has to give a notice to be or not to be a partner within ___ month(s) from attaining his majority.

  1. 1

  2. 3

  3. 6

  4. 12


Correct Option: C
Explanation:

Option (3) is correct: U/s 30 (5) of the Act, it is essential to give a public notice within 6 months whether the minor partner wants to continue as a partner or not.

Which of the following is/are true regarding the expulsion of a partner?

  1. The expulsion must be in the interest of the partnership.

  2. The partner to be expelled is served with notice.

  3. He should be given an opportunity of being heard.

  4. All of the above


Correct Option: D
Explanation:

Option (4) is correct: All of the above terms are true regarding expulsion of a partner.

A minor may be

  1. a partner of a firm

  2. representative of a firm

  3. entitled to carry on the business of a firm

  4. admitted to the benefits of a partnership


Correct Option: D
Explanation:

Option (1) is incorrect: A minor cannot be a partner of a firm. Option (2) is incorrect: A minor cannot be a representative of a firm. Option (3) is incorrect: A minor is not entitled to carry on the business of a firm. Option (4) is correct: U/s 30 of the Act, a minor can be admitted to the benefits of a partnership with the consent of all the partners for the time being, but not in the losses.

A partnership may be registered with

  1. registrar of companies

  2. registrar of partners

  3. registrar of firms

  4. district court


Correct Option: C
Explanation:

Option (1) is incorrect: Only companies can be registered with registrar of companies. Option (2) is incorrect: No such authority exists. Option (3) is correct: A partnership firm is a firm which has to be registered with registrar of firms. Option (4) is incorrect: District court has no such authority.

Partnership arises from

  1. status

  2. contract

  3. operation of law

  4. All of the above


Correct Option: B
Explanation:

Option (1) is incorrect: Partnership arises from contract and not from status. Option (2) is correct: U/s 5 of Partnership Act, the relation of partnership arises from contract and not from status. Option (3) is incorrect: HUF or a company arises from operation of law.

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