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Indian Partnership Act, 1932....................................................................................................... 1

PRELIMINARY & NATURE OF PARTNERSHIP...................................................................... 1
RELATIONS OF PARTNERS TO ONE ANOTHER..................................................................6
RELATIONS OF PARTNERS TO THIRD PARTIES................................................................. 8
INCOMING AND OUTGOING PARTNERS............................................................................13
DISSOLUTION OF A FIRM.................................................................................................... 15
REGISTRATION OF FIRMS...................................................................................................19

Indian Partnership Act, 1932

PRELIMINARY & NATURE OF 2. Under Section 2(b) of the Indian

PARTNERSHIP Partnership Act, ‘business’ includes
a. Every trade and occupation
1. An act, to be called on ‘act of a firm’, within b. Every occupation and profession
the meaning of Section 2(a) of the Indian c. Every trade, occupation and
Partnership Act, 1932 is— profession
a. Every act of the partners d. Every trade and profession
b. Only such acts which give rise to a Ans. (c) [BJS 2013]
right enforceable by or against the
firm The correct answer is option (c): "Every
c. Such acts which do not give rise to a trade, occupation and profession".
right enforceable by or against the According to Section 2(b) of the Indian
firm Partnership Act, 1932, 'business' is broadly
defined to include any trade, occupation, or
d. Either (a) or (b) or (c)
profession. This inclusive definition
Ans. (b) [U.P. HJS 2009] ensures that partnerships can be formed
across various economic activities without
limitation to specific types.
The correct answer is option (b): "Only
such acts which give rise to a right
enforceable by or against the firm". This 3. "Partnership" means
interpretation aligns with Section 2(a) of the a. Joint venture
Indian Partnership Act, 1932, which defines
b. Agreement between the persons to
an act of the firm as those actions
undertaken by partners that bind the firm share the profit of a business carried
legally. This means any act that can create on between them
legal obligations or rights for the firm c. Agreement between the persons to do
qualifies as an act of the firm. some work
d. None of the above

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Ans. (b) [M.P. CJ 2012] a. The Indian Partnership Act, 1932

stands repealed
b. The provisions of the Indian
The correct answer is option (b):
"Agreement between the persons to share Partnership Act, 1932 ipso facto apply
the profit of a business carried on between to Limited Liability Partnership (LLPs)
them". This encapsulates the essence of a also
partnership, where two or more people c. Both the Acts co-exist but the
agree to share the profits (and possibly provisions of the Indian Partnership
losses) of a business venture. It highlights Act, 1932 are not applicable to LLPs
the collaborative and financial-sharing
aspects fundamental to partnerships. save as otherwise provided
d. The Limited Liability Partnership Act,
2008 is applicable to only
4. The true test of partnership is based on metropolitan cities as defined therein
a. Sharing of profit only and the Indian Partnership Act, 1932
b. Sharing of profit and loss continues to apply to the rest of the
c. Mutual agency country.
d. Intention of the parties Ans. (c) [DJS 2011]
Ans. (c) [PJS 2019]

The correct answer is option (c): "Both the

The correct answer is option (c): "Mutual Acts co-exist but the provisions of the
agency". The true test of partnership under Indian Partnership Act, 1932 are not
the Act is mutual agency, where each applicable to LLPs save as otherwise
partner acts as both an agent and a provided". The introduction of the Limited
principal, binding the firm while carrying out Liability Partnership Act, 2008 did not
business activities in the firm’s name. This repeal the Indian Partnership Act, 1932;
mutual agency concept is central to instead, it provided a new structure where
understanding partnerships' operational LLPs operate under different regulations,
dynamics. with the traditional partnership act
continuing alongside but not governing
5. Which of the following is a strong but not LLPs.
sufficient test of partnership
a. Sharing of profits 7. The historic case laying down the test for
b. Sharing of losses determining the existence of partnership is
c. Either of the two a. Grave v. Smith
d. None of the above b. Waugh v. Carver
Ans. (a) [DJS 2007] c. Bloream v. Pell
d. Cox v. Hickman
Ans. (d) [Bihar APO 2013]
The correct answer is option (a): "Sharing
of profits". Sharing profits is a strong
indicator of a partnership but not The correct answer is option (d): "Cox v.
conclusive on its own, as it must be Hickman". This case laid down significant
accompanied by other factors such as principles regarding the test for the
mutual agency and shared control of the existence of a partnership, focusing on
business to establish a legal partnership. mutual agency and the parties' intention,
thereby influencing the legal framework
6. Upon the coming into force of the Limited and understanding of partnerships
extensively.
Liability Partnership Act, 2008:

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a. Result of an agreement
8. In which of the following cases, a b. Organised to carry on business
partnership exist: c. Carried on by all or any of them acting
a. Several persons jointly purchase for all
goods for resale with a view to divide d. Separate legal entity
the profits arising from the Ans. (d) [BJS 2009]
transaction.
b. Persons (co-owners) who join in the
The correct answer is option (d): "Separate
purchase of goods for the purpose of legal entity". A partnership, unlike a
dividing the goods themselves. corporation, does not form a separate legal
c. A, B and C agreed that each should entity from its partners. This characteristic
furnish Rs. 3000 worth of goods to be distinguishes it from other business
shipped on a joint venture, the profits structures where the entity is legally distinct
to be divided between them according from its founders or shareholders.
to the amount of their several
shipments. 11. Which of the following is not an essential
d. Two tenants in common of a house let requisite for creating a partnership as per
it and divide the rent equally. Section 4 of the Partnership Act?
Ans. (a) [DJS 2010] a. An agreement to carry on a business
b. Sharing of profits
c. Sharing of losses
The correct answer is option (a): "Several
persons jointly purchase goods for resale d. Business to be carried by all or any of
with a view to divide the profits arising from them acting for all
the transaction". This scenario indicates a Ans. (c) [U.P. HJS 2012]
partnership as it involves the joint operation
of a business with the intent to share
profits, a core element of a partnership. The correct answer is option (c): "Sharing
of losses". Section 4 of the Indian
Partnership Act does not specifically
9. A partnership firm is require the sharing of losses as an
a. A distinct legal entity from its partners essential element for forming a partnership.
b. Not a distinct legal entity from its It primarily requires an agreement to share
partners profits derived from a business conducted
by all or any of the partners acting for all.
c. A juristic person Therefore, sharing of losses, while
d. None of the above common, is not a legal necessity for
Ans. (b) [HJS 2010, 2014] establishing a partnership.

The correct answer is option (b): "Not a 12. In which of the following cases, a
distinct legal entity from its partners". partnership does not exist ?
Unlike corporations, partnerships in Indian I. Lender of money receiving profits.
law are not considered separate legal II. Servants or agents receiving profits.
entities from the partners themselves,
meaning the partners are personally liable III. Widow or child of a deceased partner
for the firm's obligations. receiving profits.
IV. Seller of goodwill receiving profit.

10. Which of the following is not an essential

a. I,II and III
feature of partnership ?
b. I,II and IV

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c. II,III and IV
determining the existence of a partnership,
d. All of the above particularly focusing on the intention to
Ans. (d) [DJS 2010, 2019] share profits and losses, mutual agency,
and joint control or management of the
business.
The correct answer is option (d): "All of the
above". In the given scenarios, the
presence of profit-sharing arrangements 15. An act of a firm means:
does not necessarily indicate the existence a. Any act of partner or agent of the firm
of a partnership. The scenarios outlined which gives rise to a right enforceable
involve profit-sharing as a result of
by or against the firm
contractual agreements rather than mutual
agency or co-ownership in the business's b. Any act by all the partners
operations. These cases generally involve c. Any omission by all the partners
specific, agreed-upon terms rather than a d. All of the above
true partnership arrangement. Ans. (d) [HJS 2021]

13. As per Section 5 of the Indian The correct answer is option (d): "All of the
Partnership Act, the relationship of above". An act of a firm encompasses any
partnership is created by : action or omission by any partner or agent
a. Status of the firm which is capable of creating
b. Contract rights or obligations enforceable by or
against the firm. This definition reflects the
c. Statute
wide range of activities that can legally bind
d. None of the above the firm, emphasizing the collective
Ans. (b) [OJS 2014, PJS 2013] responsibility in partnerships.

The correct answer is option (b): 16. A partnership not for any fixed duration is
"Contract". Section 5 of the Indian a. Partnership at will
Partnership Act specifies that the b. Indissoluble partnership
relationship of partnership arises from a
c. Either (a) or (b)
contract and not from status, will, or
inheritance. This emphasizes that a mutual d. None of the above
agreement is essential for establishing a Ans.(a) [PJ 2015, 2017, HJS 2014, DJS
partnership, distinguishing it from other 2007]
forms of business relationships or family
associations.
The correct answer is option (a):
"Partnership at will". A partnership not
14. The mode of determining the existence of formed for any specific duration or without
partnership has been laid down in a definite term is classified as a partnership
a. Section 5 at will, meaning it can continue indefinitely
b. Section 6 until any partner decides to end it or until
an event occurs that dissolves the
c. Section 9
partnership according to the law.
d. Section 10
Ans. (b) [BJS 2013]
17. Where a partnership firm is constituted for
a fixed period and after the expiration of that
The correct answer is option (b): "Section term the firm continues to carry on business
6". Section 6 of the Indian Partnership Act
without any agreement
outlines the factors to consider when

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a. The partnership stands extended till c. No partnership

the new agreement d. Partnership at will
b. The partnership becomes the Ans. (d) [Mah. CJ 2021]
partnership at will
c. The partnership becomes illegal
The correct answer is option (d):
d. The partnership stands dissolved on "Partnership at will". When there is no
the date of the expiry of the term and contract specifying the duration or the
no partnership can be said to be in conditions for the termination of a
existence partnership, it is classified as a partnership
Ans. (b) [Bihar APO 2013] at will, meaning it operates without a fixed
end date and can be dissolved at any time
by any partner.
The correct answer is option (b): "The
partnership becomes the partnership at
will". When a partnership constituted for a 20. A partnership is partnership at will
fixed period continues without a specific a. When no provision is made for
new agreement after the term ends, it duration of partnership
defaults to a partnership at will, allowing b. When no provision is made for
the partnership to continue under flexible determination of partnership
terms until further notice. c. Both (a) and (b) are true
d. Either (a) or (b) is true
18. In a partnership at will Ans. (c) [BJS 2018]
a. A partner of a firm can retire from the
firm at any time by giving a notice of
The correct answer is option (c): "Both (a)
his intention to retire to his and (b) are true". A partnership is
co-partners considered a partnership at will if there is
b. A partner of a firm can dissolve the no agreement specifying the duration of the
firm at any time by giving a notice of partnership or the conditions under which it
his intention to dissolve the firm to his may be terminated, allowing any partner to
co-partners. end the partnership without cause at any
time.
c. Either (a) or (b)
d. Neither (a) nor (b)
Ans. (c) [PJS 2010] 21. What is a partnership at will ?
a. Created under a will by testator
b. Created by consent of all partners
The correct answer is option (c): "Either (a) c. Partnership without provision for
or (b)". In a partnership at will, any partner
may retire or dissolve the firm at any time duration
by giving appropriate notice to the other d. None of the above
partners, reflecting the flexible and Ans. (c) [MJS 2010]
indefinite nature of such partnerships.
The correct answer is option (c):
19. Where no provision is made by contract "Partnership without provision for duration".
between the partners for the duration of their A partnership at will is defined as a
partnership or for the determination of their partnership where there is no specified
partnership the partnership is: duration or termination clause, making it
flexible and subject to dissolution at any
a. Sleeping partnership partner's discretion.
b. Particular partnership

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RELATIONS OF PARTNERS TO b. False

ONE ANOTHER c. Only when the statute contemplates
such liability
d. None of the above
Ans. (b) [Bihar HJS, 2020]
1. General duties of partners have been laid
down in
a. Section 9 of the Act The correct answer is option (b): "False".
b. Section 10 of the Act The statutory duty under Section 10 of the
Partnership Act to indemnify the firm for
c. Section 11 of the Act
loss caused by a partner's fraud does not
d. Section 13 of the Act extend to imposing vicarious criminal
Ans. (a) [Bihar APO 2013] liability on the other partners. This principle
clarifies that criminal liability is personal
and not transferable through partnership.
The correct answer is option (a): "Section 9
of the Act". Section 9 of the Indian
Partnership Act, 1932, explicitly lays down 4. An agreement in restraint of trade in a
the general duties of partners. These partnership under Section 11 of the Indian
duties primarily revolve around partners Partnership Act is
acting with honesty and in good faith for
a. Valid
the mutual benefit of all involved in the
partnership. b. Voidable
c. Void
d. Illegal
2. Under Section 10, every partner has a duty
Ans. (a) [PJS 2010]
to indemnify the firm for any loss caused to
the firm by his …………. in the conduct of the
business of the firm. The correct answer is option (c): "Void".
a. Negligence Agreements in restraint of trade within
partnerships are generally considered void
b. Wrongful act
under Section 11 of the Indian Partnership
c. Fraud Act, as they are against public policy. This
d. All of the above includes any agreement that restricts
Ans. (c) [HJS 2014] partners from engaging in any trade or
business during or after the termination of
the partnership.
The correct answer is option (c): "Fraud".
According to Section 10 of the Indian
Partnership Act, every partner is required 5. Z and W are partners in a stationery
to indemnify the firm for any loss caused to business. Z orders on the firm's letter head to
the firm by his fraud. This requirement supply two bags of wheat at his residence.
underscores the high level of trust and What will be the liability of the firm under the
integrity expected of partners in managing
Indian Partnership Act, 1932?
the affairs of the firm.
a. The firm is not liable to pay the debt
b. The firm is liable to pay the debt
3. Effect of the statutory duty under Section c. The firm is liable only for half of the
10 of the Partnership Act to indemnity the debt
firm for loss caused by any partner by his d. None of the above
fraud casts a vicarious liability even in Ans. (a) [PJS 2015]
respect of criminal liability.
a. True

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8. The term 'goodwill' is a thing easy to

The correct answer is option (a): "The firm
is not liable to pay the debt". Under the describe but very difficult to define, is stated
Indian Partnership Act, the firm is liable by
only for acts done by a partner within the a. Lord Herschell
scope of their apparent authority. Ordering b. Lord Heldaene
wheat for personal use does not fall within c. Lord Mac Naughten
the scope of a stationery business's d. Lord Eldon
operations, thus the firm is not liable for
such a debt. Ans. (c) [BJS 2013]

6. If a partner chooses to use any assets of The correct answer is option (c): "Lord
the partnership firm for his own purpose, it MacNaughten". This statement about the
nature of 'goodwill' being difficult to define
gives rise to but easy to describe reflects the abstract
a. Civil liability of the partner nature of goodwill as an intangible asset,
b. Criminal liability of the partner which is recognized for its value in
c. Both (a) and (b) commercial practices and was articulated
d. Either (a) or (b) by Lord MacNaughten.
Ans. (a) [BJS 2013]
9. Unless the contrary intention appears,
The correct answer is option (a): "Civil property and rights and interest in property
liability of the partner". If a partner uses acquired with money belonging to the firm are
partnership assets for his own personal deemed to have been acquired for
benefit, this act can lead to civil liability, as a. The benefit of the Partners
it may involve breach of trust or b. The Firm
misappropriation of partnership resources. c. The benefit of both the Partners and
However, it does not necessarily result in
criminal liability unless additional criminal the firm
elements are involved. d. The public in general
Ans. (b) [PJS 2019]

7. Goodwill of a partnership business is the

property of the partnership The correct answer is option (b): "The
a. Under Section 14 Firm". Under the Partnership Act, unless
b. Under Section 13 explicitly stated otherwise, any property
acquired with the funds of the firm is
c. Under Section 12 presumed to have been acquired on behalf
d. Under Section 11 of the firm and is considered firm property.
Ans.(a) [HJS 2011, DJS 2015, Bihar APO This rule helps maintain clarity regarding
2013] ownership of assets in a partnership.

The correct answer is option (a): "Under 10. A partner cannot contract himself out of
Section 14". Section 14 of the Indian which of the following duties ?
Partnership Act states that the goodwill of I. Duty of utmost good faith, Le.
the business is considered the property of uberrimae fidei,
the partnership. This provision II. Duty to carry on business to greatest
acknowledges the value of goodwill as an
integral asset developed through the efforts common advantage,
of the partnership. III. Duty to render true accounts and full
information.
IV. Duty to indemnify for fraud.

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V. Duty to indemnify for wilful neglect. 12. Which of the proposition is correct?
VI. Duty to properly use the firm’s a. Every partner has a right to take part
property in the conduct of business.
b. Every partner is bound to attend
a. I,II,III,IV and VI diligently to his duties.
b. I,II,IV and V c. Every partner has a right to have
c. I,II,III and IV access to inspect account books
d. I,II, IV and VI d. All the above.
Ans. (c) [DJS 2019] Ans. (d) [Mah. CJ 2021]

The correct answer is option (c): "I,II,III and The correct answer is option (d): "All the
IV". A partner cannot contract out of the above". In a partnership, every partner has
duties of utmost good faith, carrying on the right to participate in the management
business for the greatest common of the business, is obligated to attend
advantage, rendering true accounts and full diligently to their duties, and has the right
information, and indemnifying for fraud. to access and inspect the partnership's
These fundamental duties are essential for books of account. These rights and
the proper functioning and legal obligations are fundamental to the
compliance of the partnership. transparent and democratic management
of partnership businesses, ensuring that
each partner can contribute to and monitor
11. A notice to one partner operates as a the firm's activities.
notice to the whole firm. However
a. The notice must have been given to a
partner who habitually acts in the RELATIONS OF PARTNERS TO
business of the firm. THIRD PARTIES
b. Notice to a dormant or a sleeping
partner would also suffice. 1. Which of the following sections of the
c. Notice to a partner who commits a Indian Partnership Act bestows every partner
fraud on the firm will not be a notice to with the authority of an agent?
the firm. a. Section 17
d. Both (a) and (c) are correct b. Section 18
Ans. (d) [DJS 2019] c. Section 19
d. Section 20
Ans. (b) [U.P. HJS 2014]
The correct answer is option (d): "Both (a)
and (c) are correct". According to the
principles of partnership law, a notice given The correct answer is option (b): "Section
to one partner who actively engages in the 18". Section 18 of the Indian Partnership
business of the firm is considered as notice Act states that every partner is an agent of
to the firm. However, notice given to a the firm for the purpose of the business of
partner who commits fraud against the firm the firm. This provision establishes the
does not count as notice to the firm if the basis for mutual agency, which is a
partner conceals the information. This fundamental characteristic of partnerships,
distinction is critical in ensuring that legal enabling partners to conduct business on
notices affecting the firm's operations are behalf of one another.
effectively communicated, while also
protecting the firm from the dishonest
actions of any single partner. 2. State which of the statements is true ?
a. Partner is an agent of the firm

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b. Partner is owner of the firm

The correct answer is option (d): "All of the
c. Partner is director of the firm above". The implied authority of a partner
d. None of the above generally does not include the authority to
Ans. (a) [MJS 2010] compromise suits, transfer immovable
properties, or enter into partnerships on
behalf of the firm. These actions typically
The correct answer is option (a): "Partner require express authorization from the
is an agent of the firm". This statement partnership or are governed by specific
reflects the legal relationship defined under provisions in the partnership agreement.
the Partnership Act, where each partner
acts as an agent for the firm and for the
other partners in the conduct of partnership 5. Out of the following statements, point out
business, allowing them to bind the firm which one is not correct regarding implied
and each other in business transactions. authority of the partner to act as agent of the
firm.
3. Implied authority of partner as agent of the a. He has right to sell the goods or
firm under section 19 of the Partnership Act chattels of the firm.
does not empower him to b. He has right to receive payment of
a. Compromise or relinquish any claim debts due to the firm.
by the firm. c. He has right to make an equitable
b. Withdraw a suit filed on behalf of the mortgage by depositing the title deeds
firm, belonging to the firm.
c. Admit any liability in a suit against the d. He has right to acquire immovable
firm. property on behalf of the firm.
d. All these Ans. (d) [BJS, 2020]
Ans. (d) [DHJS 2014]
The correct answer is option (d): "He has
The correct answer is option (d): "All right to acquire immovable property on
these". Under Section 19 of the behalf of the firm". Typically, the implied
Partnership Act, the implied authority of a authority of a partner does not extend to
partner does not extend to compromising acquiring immovable property on behalf of
or relinquishing claims, withdrawing suits, the firm. Such actions usually require
or admitting liabilities in suits against the express consent or are specified in the
firm, unless specifically authorized by the partnership agreement.
other partners or by the nature of the
business. 6. By implied authority, each partner binds all
the partners by his acts in all matters which
4. Which is incorrect regarding implied are within the scope and objects of
authority of a partner partnership. In a partnership of general
a. He can compromise suits on behalf of commercial nature, which of the following is
firm not within the implied authority of partners?
b. He can transfer immovable properties a. That every partner may pledge or sell
of firm the partnership property
c. He can enter into partnership on b. That any partner may admit any
behalf of the above liability in a suit against the firm
d. All of the above c. That every partner may borrow money
Ans. (d) [DJS 2007] on account of the partnership

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d. That every partner may engage

and (b)". A firm can be held liable for the
servants for the partnership business wrongful acts of a partner if these acts
Ans. (b) [BJS 2016] have been ratified by the other partners
with full knowledge of the facts, and if the
acts could legally have been done with the
The correct answer is option (b): "That any authority of the partners. Ratification under
partner may admit any liability in a suit these conditions ensures that the partners
against the firm". While partners generally collectively agree to accept legal
have the authority to manage day-to-day responsibility for the actions taken.
operations, admitting liability in a legal suit
typically goes beyond the scope of implied
authority and requires explicit consent from 9. Which one of the following is not correctly
the partnership. matched:
a. Definition of Partnership — Section 4
7. The authority of a partner to bind the firm b. Partnership at Will —Section 7
by his acts done in the usual course of c. Expulsion of Partner — Section 33
business is called his "implied authority". d. Authority of Partner in
Such authority does not include : Emergency—Section 23
a. Selling the firm's goods. Ans. (d) [HADA 2016]
b. To borrow in a trading firm.
c. Settling accounts with the persons The correct answer is option (d): "Authority
dealing with the firm. of Partner in Emergency—Section 23". The
d. Withdraw a suit or proceeding filed on authority of a partner in an emergency to
the firm's behalf. act for the firm is actually outlined in
Ans. (d) [DJS 2010, 2014] Section 21 of the Indian Partnership Act,
not Section 23. Section 21 allows a partner
to take any necessary actions to prevent
The correct answer is option (d): "Withdraw loss to the firm in case of an emergency,
a suit or proceeding filed on the firm's acting within the scope of his apparent
behalf". A partner's implied authority does authority.
not generally extend to withdrawing legal
suits or proceedings; such actions usually
require specific authorization from the firm 10. Under Section 25 of the Indian
to ensure that the legal strategy aligns with Partnership Act, 1932 the liability of the
the firm's interests and policies. partners for the acts of the firm is:
a. Joint and several
b. Several
8. A firm can be held liable for the wrongful
c. Joint or several
act of a partner where the act has been
d. Joint
ratified by the partners, provided
Ans. (a) [HJS 2014]
a. The act could be legally done with the
authority of the partners
b. The partners ratify the act with full The correct answer is option (a): "Joint and
knowledge of the facts several". Under Section 25 of the Indian
c. Neither (a) nor (b) Partnership Act, 1932, the liability of
d. Both (a) and (b) partners for the acts of the firm is both joint
and several. This means that a third party
Ans. (d) [PJS 2010] can claim full compensation from any
single partner or from all partners
The correct answer is option (d): "Both (a) collectively, depending on the

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circumstances. after attaining majority or learning of his

admission to the benefits of the partnership
(whichever is later) to decide if he wants to
11. Which of the following Sections defines become a partner. Failing to give notice
the doctrine of holding out, creating the implies his consent to become a partner.
liability of a ‘Non-partner’ under Indian
Partnership Act?
13. Which one of the following statements is
a. Section 28
correct for a minor who has been admitted to
b. Section 29
the benefits of the partnership?
c. Section 30
a. A creditor of the firm sues against the
d. Section 31
minor's share in the firm for his credit.
Ans. (a) [HJS 2010, HADA 2016]
b. Such minor sues the partners for
access to accounts of the firm.
The correct answer is option (b): "Section c. Such minor sues the partners for
29". Section 29 of the Indian Partnership share of the profits of the firm.
Act defines the doctrine of holding out, d. On finding some foulness in the
where someone who is not actually a
business, he files a case of
partner is treated as such because they
have represented themselves or allowed dissolution of the firm.
others to represent them as a partner, thus Ans. (a) [BJS, 2020]
becoming liable as a partner to those who
have relied upon this representation.
The correct answer is option (a): "A
creditor of the firm sues against the minor's
12. According to Section 30 of the share in the firm for his credit". A minor
Partnership Act, "at any time within 6 months admitted to the benefits of a partnership is
of his attaining majority or of obtaining not personally liable for the debts of the
firm; only his share in the profits and his
knowledge that he had been admitted to the
contributions to the partnership can be
benefits of partnership, which ever date is targeted by creditors.
later, a minor can elect to become or not to
become a partner."
14. A minor acting through the guardian :
a. Such option is exercised by giving a
a. Can be inducted as partner of a firm
public notice.
b. Can be admitted to the benefit of
b. If he remains silent and fails to give
partnership with personal liability
such a notice there is a presumption
c. Can be admitted to the benefit of
that he wants to be a partner and on
partnership without personal liability
the expiry of the said 6 months he
d. Cannot be admitted to benefit of
shall become a partner in the firm.
partnership
c. If he did not exercise the option, he
Ans. (c) [DJS 2018]
will be deemed to become a partner in
firm.
d. All are correct. The correct answer is option (c): "Can be
Ans. (d) [DJS 2010] admitted to the benefit of partnership
without personal liability". A minor can be
admitted to the benefits of a partnership,
The correct answer is option (d): "All are meaning he can share in the profits but is
correct". According to Section 30 of the not personally liable for the firm's liabilities.
Indian Partnership Act, a minor admitted to His financial exposure is limited to his
the benefits of partnership has six months

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share in the partnership. benefits of a partnership must decide within

six months of reaching majority whether to
become a full partner or leave the
15. A person who is a minor can be admitted partnership.
to the benefits of a partnership, if
(i) His share is hable for the acts of the firm.
17. Which of the following is not correct about
(ii) He can elect on attaining majority to
a minor ?
continue or not to continue as partner by
a. He cannot become a partner.
issuing a public notice.
b. He can be admitted to the benefits of
(iii) He can be made personally liable.
partnership.
(iv) He may not sue the partners for the
c. He is personally liable for the acts of
payment of his share save when severing his
the firm.
connection with the firm.
d. He can elect to become or not to
become a partner on attaining the
Which of the following is correct?
majority.
a. (i) and (ii)
Ans. (c) [BJS 2018]
b. (ii) and (iv)
c. (i), (ii) and (iv)
d. All of the above The correct answer is option (c): "He is
Ans. (c) [DHJS 2020] personally liable for the acts of the firm".
This statement is not correct; a minor can
be admitted to the benefits of a
The correct answer is option (c): "(i), (ii) partnership, but he is not personally liable
and (iv)". A minor's share in the partnership for the firm's debts or obligations. His
is liable for the acts of the firm, he must liability is restricted to his share of the
decide upon reaching majority whether to partnership assets.
continue as a partner (which requires
issuing a public notice), and he may sue for
his share only when severing his 18. Which is a correct proposition where a
connection with the firm. Minors are not minor is admitted to the benefits of a
made personally liable for partnership partnership firm ?
obligations. a. The minor is personally liable for the
acts of the firm
16. A minor, who has been admitted to the b. Minor share is liable for the acts of the
benefits of the partnership, under Section 30 firm
of the Indian Partnership Act on attaining c. Minor may not have access to inspect
majority has to exercise an option, to stay or and copy any of accounts of the firm.
to leave the firm, within d. None of the above
a. One month of attaining majority Ans. (b) [Bihar HJS, 2020]
b. Six months of attaining majority
c. 90 days of attaining majority The correct answer is option (b): "Minor's
d. None of the above share is liable for the acts of the firm".
Ans. (b) [HJS 2010, 2013] When a minor is admitted to the benefits of
a partnership, he is not personally liable;
only his share in the partnership can be
The correct answer is option (b): "Six used to settle debts or obligations incurred
months of attaining majority". Under by the firm.
Section 30(5) of the Indian Partnership Act,
a minor who has been admitted to the

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19. When a minor elects to become a partner INCOMING AND OUTGOING

he becomes personally liable to third parties PARTNERS
for all acts of the firm done since
a. He was admitted to the benefits of 1. Generally, an introduction of a new partner
partnership. in a partnership firm would require the
b. From the date of his attaining majority. consent of :
c. From the date of his becoming a a. The majority of the partners
partner. b. All the partners
d. Both (b) and (c) c. The majority of partners barring the
Ans. (a) [DJS 2014] dormant partners
d. The partners having majority share in
The correct answer is option (a): "He was the firm
admitted to the benefits of partnership." Ans. (b) [HJS 2013]
When a minor who has been admitted to
the benefits of a partnership elects to
become a full partner upon reaching The correct answer is option (b): "All the
majority, he becomes personally liable for partners". Introducing a new partner into a
all acts of the firm done since he was partnership firm generally requires the
initially admitted to the benefits of the unanimous consent of all existing partners
partnership. This retroactive liability is unless the partnership agreement specifies
crucial as it impacts financial and legal otherwise. This ensures that all partners
responsibilities stemming from the time of agree on the admission of new members,
his initial admission as a beneficiary. maintaining mutual trust and agreement in
the partnership’s management.

20. In which of the following situations, a

public notice is not required to be given under 2. On the death of a sole proprietor, his heirs
the Indian Partnership Act, 1932 automatically become the partners of old firm.
a. When a partner retires from the firm The statement is :
b. When a partner is expelled from the a. True
firm b. False
c. When the firm is dissolved c. Partly true
d. When an alteration is made in the d. None of the above
name of the firm Ans. (b) [U.P. HJS 2014]
Ans. (d) [HJS 2021]
The correct answer is option (b): "False".
The correct answer is option (d): "When an On the death of a sole proprietor, his heirs
alteration is made in the name of the firm". do not automatically become partners in
Under the Indian Partnership Act, 1932, any existing partnership the deceased was
public notice is typically required when a involved in. Instead, the partnership may
partner retires, is expelled, or when the firm need to be reformed or dissolved as per
is dissolved. However, a change in the the agreement or default rules under the
firm's name does not require a public Partnership Act.
notice to be effective. This distinction
emphasizes the importance of public notice 3. Out of the following which is not the correct
in cases where changes might affect third statement regarding ‘retirement of a partner'?
parties' dealings with the firm.
a. A partner may retire with the consent
of all other partners

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b. A partner may retire in accordance Ans. (a) [HJS 2011]

with an express agreement by the
partners
The correct answer is option (a):
c. A partner may retire with the consent "Unanimous consent of all the partners".
of any other partner Under Section 31 of the Indian Partnership
d. Where the partnership is at will, a Act, a new partner can only be introduced
partner may retire, by giving notice in into a firm with the unanimous consent of
writing to all the other partners of his all existing partners. This requirement is
intention to retire designed to protect the interests of all
partners by ensuring they all agree to the
Ans. (c) [MJS 2011] addition of new members.

The correct answer is option (c): "A partner 6. In which of the following cases, a partner
may retire with the consent of any other may cease to be a partner without the
partner". This statement is incorrect as
typically, a partner may retire with the dissolution of the firm ?
consent of all other partners, according to a. Retirement
an express agreement among the partners, b. Insolvency
or by giving notice if the partnership is at c. Death
will. d. All of these
Ans. (d) [DJS 2014]
4. A partner can retire by notice of his
intention to retire, where The correct answer is option (d): "All of
a. The partnership is at will these". A partner may cease to be a
b. The partnership ts for a specified partner without leading to the dissolution of
period the firm through retirement, insolvency, or
c. Where a contract has been made death. Each of these circumstances
between the partners for its individually allows for the departure of a
partner without necessarily ending the
determination firm’s existence.
d. None of the above
Ans. (a) [PJS 2010]
7. Under the Indian Partnership Act, 1932,
where the partnership is at will, a partner way
The correct answer is option (a): "The retire.
partnership is at will". In partnerships that a. By giving oral notice expressing his
are at will, any partner may retire by giving
notice of their intention to do so to the other intention
partners. This option highlights the flexible b. By giving written notice expressing his
nature of at-will partnerships in terms of intention
membership changes. c. Without any notice
d. None of the above
5. A new person can be introduced into a firm Ans. (b) [PJS 2015]
as a partner under Section 31 of the Act by
a. Unanimous consent of all the partners The correct answer is option (b): "By giving
b. Majority consent amongst the written notice expressing his intention". In a
partners partnership at will, a partner may retire by
c. With the consent of the managing giving written notice to the other partners.
partner This formality ensures that all partners are
clearly informed of the intention to retire,
d. None of the above

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maintaining proper communication and terminating the business operations and

record-keeping. the relationships established under the
partnership
8. Estate of a partner who dies is :
a. Not liable for acts of partners done 2. A partnership firm may be dissolved
after his demise. a. with the consent of all partners.
b. Liable for acts of partners done after b. in accordance with a contract
his demise between the partners.
c. Liable for acts of partners after his c. Both (a) and (b)
demise, if living partners are unable to d. None of these
pay the debts. Ans. (c) [DJS 2014]
d. Liable for acts of partners after his
demise, if the third person is not The correct answer is option (c): "Both (a)
aware of the demise. and (b)". A partnership firm can be
Ans. (a) [DJS 2018] dissolved with the unanimous consent of all
partners or in accordance with any
pre-existing agreement between the
The correct answer is option (a): "Not liable partners that stipulates the conditions and
for acts of partners done after his demise". terms under which dissolution may occur.
The estate of a deceased partner is not This flexibility allows partners to predefine
liable for any partnership obligations or the exit strategies or agree upon them as
acts undertaken after the partner's death. needed.
This legal principle protects the deceased
partner’s estate from indefinite liability and
reflects the personal nature of partnership 3. Subject to contract between the partners, a
obligations. firm is dissolved:
a. If constituted for a fixed term, by the
expiry of that term
DISSOLUTION OF A FIRM
b. If constituted to carry out one or more
adventures or undertakings, by the
1. Dissolution of a firm means
completion thereof
a. The dissolution of partnership
c. By the death of a partner
between some of the partners of a
d. All the above
firm
Ans. (d) [RJS 2015]
b. The dissolution of partnership
between two or more partners of a
firm The correct answer is option (d): "All the
c. The dissolution of partnership above". A firm can be dissolved if it was
between all the partners of the firm constituted for a fixed term and that term
expires, if it was set up to carry out specific
d. All above
adventures or undertakings and these are
Ans. (c) [MJS 2011] completed, or by the death of a partner,
assuming there are no other terms in the
The correct answer is option (c): "The partnership agreement providing for
dissolution of partnership between all the continuation in such events.
partners of the firm". Dissolution of a firm
under the Indian Partnership Act refers to 4. On death of a partner, in absence of any
the cessation of the partnership business term to the contrary, a partnership firm is
as agreed among all partners, effectively
dissolved :

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a. Where the Will of deceased partner c. The partnership firm has not gained
states that the partnership will be profit in past three years
dissolved. d. None of these
b. When last of the erstwhile partner Ans. (a) [MJS 2011,PJS 2017]
dies
c. When there were only nwo partners
The correct answer is option (a): "The
and one dies conduct of the other partner is calculated to
d. When a minor admitted to benefit of prejudice the carrying on of the partnership
partnership dies business". Under Section 44(c) of the
Ans. (c) [DJS 2018] Indian Partnership Act, a partner can seek
dissolution of the partnership in court if he
can demonstrate that another partner's
he correct answer is option (c): "When behaviour detrimentally affects the
there were only two partners and one partnership's ability to continue its
dies". In a partnership consisting of only business.
two partners, the death of one partner
results in the automatic dissolution of the
firm unless there is a specific agreement to 7. A partner wants to dissolve the partnership
the contrary that provides for its firm before the agreed time, Select which one
continuation or succession. of the following is not a perfect ground for
dissolution of the firm for such partner.
5. Compulsory dissolution of a firm has been a. That one of the partners has become
provided under permanently incapable of performing
a. Section 39 of the Act his duties as a partner
b. Section 41 of the Act b. That other partner has transferred the
c. Section 40 of the Act whole of his interest in the firm to a
d. Section 44 of the Act third party
Ans. (b) [HJS 2011] c. That the business of the firm cannot
be carried on except loss
d. That the partner suing is in adulterous
The correct answer is option (b): "Section relationship with the wife of another
41 of the Act". Section 41 of the Indian
partner which is apprehensive to
Partnership Act outlines circumstances
under which a firm must be dissolved affect the business of the firm.
compulsorily, such as insolvency of all Ans. (d) [BJS, 2020]
partners or of the firm itself, or when the
business of the firm becomes illegal.
The correct answer is option (d): "That the
partner suing is in an adulterous
6. If an innocent partner seeks dissolution of relationship with the wife of another partner
a firm under section 44(c) of the Indian which is apprehensive to affect the
Partnership Act,1932, he has to satisfy the business of the firm." This is not a valid
legal ground for the dissolution of a
court that .......
partnership. Valid grounds typically relate
a. The conduct of the other partner is directly to the partnership's ability to
calculated to prejudice the carrying on continue its business or the conduct of the
of the partnership business. partners in their capacity within the firm.
b. The partnership firm is not in a
position to repay the loan borrowed 8. A dissolution of a firm can be claimed
from a Nationalised Bank under Section 44(e) of the Indian Partnership

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Act, where a partner has transferred his d. Z can sue A and B only
interest in the partnership firm to Ans. (a) [DJS 2011]
a. A partner
b. A third party
The correct answer is option (a): "Z can
c. All the partners sue A, B, C, and X". In the absence of a
d. None of the above public notice regarding C’s retirement and
Ans. (b) [HJS 2010] X's admission, third parties like Z are
entitled to assume the old partnership
persists, making A, B, C, and X all
The correct answer is option (b): "A third potentially liable for the debts incurred by
party". Section 44(e) of the Indian the firm after the changes, unless they can
Partnership Act allows for the dissolution of prove Z knew of the changes before
the firm if any partner has transferred his transacting.
entire interest in the firm to a third party,
which can disrupt the agreed-upon
structure and functioning of the 11. Which one of the following statements is
partnership. not correct for a dormant partner?
a. A dormant partner is not interested in
9. Under the Indian Partnership Act, 1932, the business of the firm.
where the partnership is at will, the firm may b. A dominant partner is not liable for the
be dissolved by any partner by giving notice firm’s liability to outsiders.
in writing of his intention to: c. A dormant partner is entitled to share
a. All the other partners. the profits of the firm.
b. Majority of the other partners. d. A dominant partner is neither active
c. Any one of the other partners. nor known to outsiders.
d. The registrar of firms. Ans. (b) [BJS. 2020]
Ans. (a) [Raj HJS 2012]
The correct answer is option (b): "A
dominant partner is not liable for the firm’s
The correct answer is option (a): "All the
liability to outsiders." This statement is
other partners". In a partnership at will, any
incorrect because it mistakenly uses the
partner can dissolve the firm by giving
term "dominant" instead of "dormant." A
notice in writing to all the other partners,
dormant partner, who does not take an
signifying their intention to dissolve the
active part in the firm’s business and may
firm. This ensures that all partners are
not be known to outsiders, is still liable for
informed and can prepare for the
the firm's liabilities to outsiders. The liability
dissolution process.
of a dormant partner to outsiders is the
same as that of the active partners.
10. A, B and C are partners in a firm. C
retires and X admitted as a new partner. The 12. A dormant is that partner
firm did not give a public notice on the a. Who has taken part in the conduct of
change but continued its business in its old the business as partner and is not
firm name. Z, a customer of the firm, deals liable for the act of the firm
with the firm after the change and the firm b. Who has never taken part in the
becomes indebted to him : conduct of the business as a partner
a. Z can sue A, B,C and X and is not liable for the act of the firm
b. Z can sue A, Band C
c. Z can sue either A, B and C, or A,
Band X

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c. Who has never taken part in the

conduct of the business as a partner
The correct answer is option (d): "All of the
but is liable for the act of the firm above". The rules outlined for settling
d. Who, due to his special status, has accounts after dissolution are all correct.
nothing to do the of the business and Losses are paid out of profits, then capital,
is entitled to the profile only. and lastly by the partners individually if
Ans.(c) [BJS 2009, 2013, MJS 2011] necessary. The assets of the firm are used
first to pay off debts to third parties, and
then to settle amounts due to partners,
The correct answer is option (c): "Who has both for advances and capital
never taken part in the conduct of the contributions.
business as a partner but is liable for the
act of the firm." A dormant partner is
someone who does not actively engage in 14. Match the following and select the correct
the firm’s business operations but is still answer using the codes given below :
liable for its debts and obligations to the List-I List-II
extent of their investment in the firm. (a) Dissolution by agreement (i) Section
(b) Dissolution by court (ii) Section 44
13. Which of the following rules shall be (c) Dissolution on contingency (iii) Section 42
observed in settling the accounts of a (d) Compulsory dissolution (iv) Section 41
partnership firm after dissolution, subject to
agreement by the partners? Code :
(1) Losses including deficiencies of capital, A B C D
shall be paid first out of profits, next out of a. (i) (ii) (iii) (iv)
capital and lastly, if necessary, by the b. (ii) (i) (iv) (iii)
partners individually in the proportion in which c. (iii) (iv) (ii) (i)
they were entitled to share profits. d. (iv) (iii) (i) (ii)
(2) The assets of the firm, including any sums Ans. (a) [PJS 2019]
contributed by the partners to make up
deficiencies of capital, shall be utilised in The correct answer is option (a):
paying the debts of the firm to third parties. Dissolution by agreement (i) Section 40
(3) The assets of the firm, including any sums Dissolution by court (ii) Section 44
contributed by the partners to make up Dissolution on contingency (iii) Section 42
deficiencies of capital, shall be applied in Compulsory dissolution (iv) Section 41
This matching correctly aligns each type of
paying to each partner ratably what is due to dissolution with its corresponding section in
him from the firm for advances as the Indian Partnership Act.
distinguished from capital.
(4) The assets of the firm, including any sums
15. When a contract creating partnership is
contributed by the partners to make up
rescinded on the ground of fraud or
deficiencies of capital, shall be applied in
misrepresentation of any of the parties
paying to each partner ratably what is due to
thereto, the party entitled to rescind is inter
him on account of capital.
alia entitled in law to
a. A lien over the entire assets of the
a. (1) and (2) above
firm forthwith, towards any capital
b. (1) and (3) above
contributed by him.
c. (1) and (4) above
d. All of the above
Ans. (d) [DHJS 2020]

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b. A right to be indemnified by the

partners guilty of the fraud against all
the debts of the firm. REGISTRATION OF FIRMS
c. Premium for his share.
d. The goodwill of the firm, preferentially. 1. Registration of a firm is
Ans. (b) [DHJS 2020] a. Mandatory
b. Desirable
The correct answer is option (b): "A right to c. Not compulsory
be indemnified by the partners guilty of the d. Directory
fraud against all the debts of the firm." Ans. (c) [HJS 2014]
When a partnership contract is rescinded
due to fraud or misrepresentation, the party
entitled to rescind the contract has a right The correct answer is option (c): "Not
to be indemnified by the fraudulent compulsory". Registration of a partnership
partners for all debts and liabilities incurred firm under the Indian Partnership Act,
by the firm. 1932, is not mandatory. However, there are
certain legal benefits to registering a firm,
such as the ability to sue other partners or
16. Where partners upon or in anticipation of the firm in court.
the dissolution of the firm make an
agreement that some or all of them will carry
2. A partnership firm is required to be
on a business similar to that of the firm within
registered under
a specified period or within specified local
a. The Indian Registration Act, 1908
limits, such agreement is
b. The Companies Act, 1956
a. Valid, if restrictions imposed are
c. The Indian Partnership Act, 1932
reasonable; notwithstanding anything
d. Indian Contract Act, 1872
contained in Section 27 of the Indian
Ans. (c) [PJS 2010]
Contract Act.
b. Void, irrespective of the nature of
restrictions imposed, on the ground of The correct answer is option (c): "The
being an agreement in restraint of Indian Partnership Act, 1932". Registration
of a partnership firm is governed by the
trade
Indian Partnership Act, 1932, which
c. Voidable outlines the process and effects of
d. None of the above registration but does not make it
Ans. (a) [HJS 2021] mandatory.

The correct answer is option (a): "Valid, if 3. A partner of an unregistered Firm cannot
restrictions imposed are reasonable; sue the Firm or any other Partner of the Firm
notwithstanding anything contained in to enforce a right:
Section 27 of the Indian Contract Act." This a. A rising from a contract
answer reflects that an agreement among
b. Conferred by the Partnership Act
partners to carry on a similar business
post-dissolution can be valid if the c. Either (a) or (b)
restrictions imposed are reasonable in d. Both (a) and (b)
terms of time and geographical scope, Ans. (d) [HADA 2016]
despite the general rule against restraint of
trade in Section 27 of the Indian Contract
Act. The correct answer is option (d): "Both (a)
and (b)". A partner of an unregistered firm

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cannot sue the firm or other partners to The correct answer is option (a):
enforce rights arising from a contract or "Registration of a partnership firm is
rights conferred by the Partnership Act. effected merely by sending an application
This limitation highlights one of the by post to the office of the Registrar of
disadvantages of not registering a Firms and having proof of dispatch,
partnership firm. irrespective of action, if any, taken
thereon." This statement is not true.
Registration of a partnership firm requires
4. Registration of Firm does not create not only the sending of an application but
Partnership, but is only the evidence of also its acceptance and processing by the
Partnership: Registrar. Simply sending an application
a. True does not effectuate registration unless the
b. Partly True Registrar processes and registers the firm.
c. False
d. Partly False 6. A partnership firm not registered with the
Ans. (a) [HADA 2016] Registrar of Firms under the Indian
Partnership Act, 1932 can:
The correct answer is option (a): "True". a. File a suit to enforce contractual rights
The registration of a partnership firm does with a third person.
not create the partnership; it merely b. File a suit based on common law
provides formal evidence that the rights.
partnership exists. The existence of a c. File a suit for recovery of money
partnership is primarily established through under an agreement under Order XXX
the agreement between the partners, not
of the Code of Civil Procedure, 1908
through the act of registration
d. File all types of civil suit which have
meant.
5. Which of the following statements is not Ans. (b) [DJS 2018]
true?
a. Registration of a partnership firm is
effected merely by sending an The correct answer is option (b): "File a
suit based on common law rights." An
application by post to the office of the
unregistered partnership firm can still file
Registrar of Firms and having proof of suits based on common law rights, which
dispatch, irrespective of action, if any, are separate from rights under contracts
taken thereon. specifically related to the business of the
b. Registration of a partnership firm is partnership. This distinction is important
not mandatory. because, under the Indian Partnership Act,
c. No suit to enforce a contractual right 1932, unregistered firms are restricted from
suing to enforce contractual rights arising
can be instituted in any court by a
from the business of the partnership.
person suing as a partner of the firm However, common law rights, such as
against the firm unless he is shown as those involving personal claims or
a partner in the Register of Firms. unrelated to the partnership agreements,
d. Only agents specially authorised in can still be pursued.
this regard can submit application to
the Registrar to inform about the
changes in the firm or its dissolution.
Ans. (a) [DHJS 2020]

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