Questions on Indian Partnership Act for CLAT PG 2026

1. Under the Indian Partnership Act, a partnership is validly formed by:

a) Operation of law or status (e.g. inheriting a business)
b) A contractual agreement between two or more persons
c) Being members of a joint Hindu Undivided Family (HUF)
d) Registration with the Registrar of Firms

Correct Answer: b

Explanation: A partnership must arise from a contract between persons to share the profits of a business. It cannot be created by status or inheritance.

2. What is considered the true test for the existence of a partnership under Indian law?

a) Capital contribution by each partner
b) Mutual agency – each partner acting as agent for all others
c) Sharing of the gross returns (revenue) of a business
d) Use of a joint trade name by the persons involved

Correct Answer: b

Explanation: Mutual agency, where each partner is both an agent and principal for the others, is the essential test of partnership.

3. Which of the following is not required for the valid formation of a partnership firm under the Act?

a) A business carried on by all partners or any of them acting for all
b) An agreement between persons to share profits of a business
c) At least two persons as partners
d) A written partnership deed that is registered with the authorities

Correct Answer: d

Explanation: A written and registered deed is advisable but not mandatory. An oral agreement is legally valid.

4. In the absence of any contrary agreement, which of the following is a default rule regarding partners’ rights and duties?

a) Partners are each entitled to a salary
b) All partners have an equal share in the profits (and losses)
c) Partners get 6% interest on capital even without profit
d) Partners cannot receive interest on loans to the firm

Correct Answer: b

Explanation: By default, partners share profits and losses equally unless otherwise agreed.

5. Regarding a minor’s status in a partnership, which statement is correct?

a) A minor can be a full partner
b) A minor may be admitted to the benefits of partnership
c) A minor cannot receive a share of the profits
d) A minor’s share is not liable for firm debts

Correct Answer: b

Explanation: A minor can be admitted to the benefits of partnership but cannot be a full partner.

6. What is one legal consequence if a partnership firm is not registered?

a) The firm’s existence is illegal
b) The firm cannot file a suit to enforce a contract
c) The partnership dissolves after a year
d) Partners are fined under the Act

Correct Answer: b

Explanation: Unregistered firms cannot sue to enforce contractual rights but can still legally exist.

7. Which of the following events will result in compulsory dissolution of a partnership firm?

a) Death of a partner
b) All or all but one partner becoming insolvent
c) Insolvency of one partner
d) Completion of a specific venture

Correct Answer: b

Explanation: If all or all but one partner becomes insolvent, the firm must be compulsorily dissolved.

a) A partner is of unsound mind
b) A partner repeatedly breaches the agreement
c) The business can only be carried on at a loss
d) Failure to register the firm

Correct Answer: d

Explanation: Failure to register is not a ground for dissolution by court; it only limits certain legal rights.

9. How can a partnership-at-will be dissolved?

a) By any partner giving written notice of intention to dissolve
b) Only by mutual agreement
c) Only through a court decree
d) It cannot be dissolved at will

Correct Answer: a

Explanation: A partnership-at-will can be dissolved by any partner by giving written notice to the others.

10. Which statement best describes a “particular partnership”?

a) A partnership for a single project, dissolved after its completion
b) A partnership that ends after a fixed term
c) A partnership with limited liability
d) A partnership among persons of the same profession

Correct Answer: a

Explanation: A particular partnership is created for one venture or project and ends when it is completed.