MCQs on Indian Partnership Act- Part I
1. Under the Indian Partnership Act, a partner’s implied authority does NOT empower them to:
A. Sell the firm’s goods
B. Borrow money on behalf of the firm
C. Submit a dispute to arbitration
D. Purchase goods on behalf of the firm
B. Borrow money on behalf of the firm
C. Submit a dispute to arbitration
D. Purchase goods on behalf of the firm
Answer: C. Submit a dispute to arbitration
Explanation: Section 19(2) of the Indian Partnership Act lists acts that a partner’s implied authority does not cover unless there is a usage or custom to the contrary. One such act is submitting disputes relating to the business of the firm to arbitration.
Explanation: Section 19(2) of the Indian Partnership Act lists acts that a partner’s implied authority does not cover unless there is a usage or custom to the contrary. One such act is submitting disputes relating to the business of the firm to arbitration.
2. Which of the following does NOT constitute a ground for dissolution of a firm by the court under Section 44 of the Indian Partnership Act?
A. Continuous losses
B. Death of a partner
C. Misconduct affecting the business
D. Incapacity of a partner
B. Death of a partner
C. Misconduct affecting the business
D. Incapacity of a partner
Answer: B. Death of a partner
Explanation: Death of a partner dissolves the firm by operation of law, not through court intervention. Section 44 provides specific grounds for dissolution by court, such as misconduct, incapacity, and losses.
Explanation: Death of a partner dissolves the firm by operation of law, not through court intervention. Section 44 provides specific grounds for dissolution by court, such as misconduct, incapacity, and losses.
3. Which of the following statements about ‘partnership at will’ is correct?
A. It must be for a specific venture
B. It cannot be dissolved without court intervention
C. It ends only on the death of a partner
D. It can be dissolved by any partner by giving notice
B. It cannot be dissolved without court intervention
C. It ends only on the death of a partner
D. It can be dissolved by any partner by giving notice
Answer: D. It can be dissolved by any partner by giving notice
Explanation: Section 7 of the Act defines a partnership at will as one where no provision is made as to the duration. Any partner may dissolve it by giving notice in writing to the other partners.
Explanation: Section 7 of the Act defines a partnership at will as one where no provision is made as to the duration. Any partner may dissolve it by giving notice in writing to the other partners.
4. A minor admitted to the benefits of partnership:
A. Is liable for losses
B. Cannot access accounts
C. Has a right to share profits
D. Becomes a partner by default upon attaining majority
B. Cannot access accounts
C. Has a right to share profits
D. Becomes a partner by default upon attaining majority
Answer: C. Has a right to share profits
Explanation: Under Section 30, a minor admitted to the benefits of partnership is not liable for losses but has a right to his agreed share of profits and access to accounts.
Explanation: Under Section 30, a minor admitted to the benefits of partnership is not liable for losses but has a right to his agreed share of profits and access to accounts.
5. Which of the following acts results in compulsory dissolution under Section 41 of the Act?
A. Misconduct of a partner
B. Insolvency of all partners
C. Failure to register the firm
D. Change in business location
B. Insolvency of all partners
C. Failure to register the firm
D. Change in business location
Answer: B. Insolvency of all partners
Explanation: Section 41 specifies that if all partners (except one) become insolvent, the firm must be compulsorily dissolved.
Explanation: Section 41 specifies that if all partners (except one) become insolvent, the firm must be compulsorily dissolved.
6. Which of the following is not a test for determining the existence of a partnership?
A. Sharing of profits
B. Mutual agency
C. Registration with the Registrar
D. Agreement between persons
B. Mutual agency
C. Registration with the Registrar
D. Agreement between persons
Answer: C. Registration with the Registrar
Explanation: Registration is not mandatory to form a partnership. The key tests include agreement, profit-sharing, and mutual agency.
Explanation: Registration is not mandatory to form a partnership. The key tests include agreement, profit-sharing, and mutual agency.
7. Which of the following is correct about the liability of a newly admitted partner?
A. Liable for all past debts
B. Liable only for debts incurred after admission
C. Automatically liable for previous debts
D. Not liable at all for firm’s debts
B. Liable only for debts incurred after admission
C. Automatically liable for previous debts
D. Not liable at all for firm’s debts
Answer: B. Liable only for debts incurred after admission
Explanation: Under Section 31, a newly admitted partner is not liable for acts done before his admission unless he agrees otherwise with creditors.
Explanation: Under Section 31, a newly admitted partner is not liable for acts done before his admission unless he agrees otherwise with creditors.
8. Which case best illustrates the concept of mutual agency in partnership law?
A. Cox v. Hickman
B. Donoghue v. Stevenson
C. Carlill v. Carbolic Smoke Ball Co.
D. Salomon v. Salomon & Co. Ltd.
B. Donoghue v. Stevenson
C. Carlill v. Carbolic Smoke Ball Co.
D. Salomon v. Salomon & Co. Ltd.
Answer: A. Cox v. Hickman
Explanation: In Cox v. Hickman, the House of Lords emphasized that the test of partnership lies in the principle of mutual agency, not merely in sharing profits.
Explanation: In Cox v. Hickman, the House of Lords emphasized that the test of partnership lies in the principle of mutual agency, not merely in sharing profits.
9. Under the Act, registration of a partnership firm is:
A. Compulsory
B. Required within one month
C. Optional, but non-registration limits legal rights
D. Required only if the firm has more than 10 partners
B. Required within one month
C. Optional, but non-registration limits legal rights
D. Required only if the firm has more than 10 partners
Answer: C. Optional, but non-registration limits legal rights
Explanation: Registration is optional, but an unregistered firm cannot sue a third party to enforce contractual rights (Section 69).
Explanation: Registration is optional, but an unregistered firm cannot sue a third party to enforce contractual rights (Section 69).
10. Which of the following statements about the doctrine of holding out is true?
A. It applies to minor partners
B. It applies after dissolution
C. It applies even if the person is unaware of the representation
D. It creates liability by estoppel
B. It applies after dissolution
C. It applies even if the person is unaware of the representation
D. It creates liability by estoppel
Answer: D. It creates liability by estoppel
Explanation: The doctrine of holding out, under Section 28, holds a person liable as a partner if they represent or knowingly allow themselves to be represented as a partner.
Explanation: The doctrine of holding out, under Section 28, holds a person liable as a partner if they represent or knowingly allow themselves to be represented as a partner.
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Ruchika Mohapatra
Contributing author
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