Partnership and LLP Questions and Answers

Q: Under section 10 of the Indian Partnership Act, 1932 every partner is under a duty :-

Under Section 10, every partner must indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.Section 10 of the Indian Partnership Act, 1932 is a short, specific rule: every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business.The other duties come from other sections. Section 9 imposes the general duties to carry on the business to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information. The duty not to carry on a competing business is in Section 16(b). None of them is Section 10.

Q: The provisions relating to Partnership before the Indian Partnership Act, 1932 were in :

Before 1932, partnership was governed by the Indian Contract Act, 1872.The law of partnership was originally contained in Chapter XI of the Indian Contract Act, 1872 (Sections 239 to 266). Those provisions were found inadequate and were repealed when the Indian Partnership Act, 1932 was enacted as a separate law.The English Partnership Act, 1890 influenced the drafting of the Indian Act but was never the law in force in India. The Sale of Goods Act, 1930 was itself carved out of the Contract Act in the same way, and the Transfer of Property Act is of 1882, not 1908, and does not deal with partnership.

Q: Alternation in partnership agreement has to be brought to the notice of registration of firms within a period of :

The answer is 90 days, on the Maharashtra version of the Partnership Act.Section 63 of the Indian Partnership Act, 1932 provides for notice to the Registrar of changes in a firm, such as its name, place of business or the partners. As enacted it fixes no time limit, and outside Maharashtra courts have allowed a reasonable time. Maharashtra amended the section (Maharashtra Act 29 of 1984, in force from 1 January 1985) so that notice has to be given within 90 days, and the question comes from a Maharashtra examination.So 90 days is the only option tied to a statute; 100, 60 and 20 days appear in no version I found. I confirmed the Maharashtra amendment from a secondary summary and not from the amending Act's text, and the question's phrase 'alteration in partnership agreement' loosely covers the changes the section names.

Q: A right to participate in profits, although strong but not a conclusive test of partnership was laid down in :

The rule was laid down in Cox v Hickman.In Cox v Hickman (1860), the House of Lords held that creditors who took a share of the profits of a business run for their benefit were not partners. Sharing of profits is strong evidence of partnership, but not a conclusive test; the real question is whether the business is carried on by or on behalf of the persons sought to be charged, the idea of mutual agency later written into partnership law.The other cases are not the source of this rule; Cox v Hickman is the one that displaced the earlier view that sharing profits automatically made one a partner.

Q: The maximum number of partners in limited liability partnership is :

There is no limit on the number of partners in a limited liability partnership.The Limited Liability Partnership Act, 2008 requires at least two partners but sets no maximum. This makes the LLP form attractive to large professional firms such as accountancy and law firms.Limits such as 10, 20 or 30 do not apply to an LLP. Ordinary partnership firms, by contrast, are restricted under the Companies Act, 2013 and its rules, which set a maximum of 50 partners for an unregistered association carrying on business.

Q: 'Goodwill' of a partnership firm business is the property of the partnership under section ................ of Partnership Act, 1932.

Goodwill is property of the firm under Section 14 of the Partnership Act, 1932.Section 14 says that, subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired for the firm or for its business, and includes also the goodwill of the business.Section 15 requires firm property to be held and used exclusively for the firm's business, Section 16 deals with personal profits earned by partners, and Section 17 with the rights and duties of partners after a change in the firm.

Q: An agreement without mentioning the terms of its existence is dealt under the Partnership Act, 1932 under Section :

The provision is Section 7.Section 7 of the Indian Partnership Act, 1932 defines a partnership at will: where no provision is made in the contract for the duration of the partnership or for its determination. Such a partnership can be dissolved by any partner giving notice to the others.Section 4 defines partnership, section 5 says partnership arises from contract and not from status, and section 6 sets out the mode of determining whether a partnership exists.

Under section 10 of the Indian Partnership Act, 1932 every partner is under a duty :-

A.To render true accounts and full information.
B.To indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.
C.Not to carry on any business other than that of the firm.
D.To be just and faithful to each other.

Exam Year(s)

Rajasthan High Court Civil Judge - 2018, Rajasthan Judicial Service - 2018,

Answer: B

Under Section 10, every partner must indemnify the firm for any loss caused to it by his fraud in the conduct of the business of the firm.

Section 10 of the Indian Partnership Act, 1932 is a short, specific rule: every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business.

The other duties come from other sections. Section 9 imposes the general duties to carry on the business to the greatest common advantage, to be just and faithful to each other, and to render true accounts and full information. The duty not to carry on a competing business is in Section 16(b). None of them is Section 10.

Discuss in Forum

The provisions relating to Partnership before the Indian Partnership Act, 1932 were in :

A.Sole of Goods Act, 1930
B.English Partnership Act, 1890
C.Indian Contract Act, 1872
D.Transfer of Property Act, 1908

Exam Year(s)

MH SET - 2018, SET Exam - 2018,

Answer: C

Before 1932, partnership was governed by the Indian Contract Act, 1872.

The law of partnership was originally contained in Chapter XI of the Indian Contract Act, 1872 (Sections 239 to 266). Those provisions were found inadequate and were repealed when the Indian Partnership Act, 1932 was enacted as a separate law.

The English Partnership Act, 1890 influenced the drafting of the Indian Act but was never the law in force in India. The Sale of Goods Act, 1930 was itself carved out of the Contract Act in the same way, and the Transfer of Property Act is of 1882, not 1908, and does not deal with partnership.

Discuss in Forum

Alternation in partnership agreement has to be brought to the notice of registration of firms within a period of :

A.100 days
B.90 days
C.60 days
D.20 days

Exam Year(s)

MH SET - 2018, SET Exam - 2018,

Answer: B

The answer is 90 days, on the Maharashtra version of the Partnership Act.

Section 63 of the Indian Partnership Act, 1932 provides for notice to the Registrar of changes in a firm, such as its name, place of business or the partners. As enacted it fixes no time limit, and outside Maharashtra courts have allowed a reasonable time. Maharashtra amended the section (Maharashtra Act 29 of 1984, in force from 1 January 1985) so that notice has to be given within 90 days, and the question comes from a Maharashtra examination.

So 90 days is the only option tied to a statute; 100, 60 and 20 days appear in no version I found. I confirmed the Maharashtra amendment from a secondary summary and not from the amending Act's text, and the question's phrase 'alteration in partnership agreement' loosely covers the changes the section names.

Discuss in Forum

A right to participate in profits, although strong but not a conclusive test of partnership was laid down in :

A.Tellis Vs. Saldanha
B.Grace Vs. Smith
C.Re; Somtow Iron Co.
D.Cox Vs. Hickman.

Exam Year(s)

MH SET - 2019, SET Exam - 2019,

Answer: D

The rule was laid down in Cox v Hickman.

In Cox v Hickman (1860), the House of Lords held that creditors who took a share of the profits of a business run for their benefit were not partners. Sharing of profits is strong evidence of partnership, but not a conclusive test; the real question is whether the business is carried on by or on behalf of the persons sought to be charged, the idea of mutual agency later written into partnership law.

The other cases are not the source of this rule; Cox v Hickman is the one that displaced the earlier view that sharing profits automatically made one a partner.

Discuss in Forum

The maximum number of partners in limited liability partnership is :

A.10
B.20
C.30
D.No limit

Exam Year(s)

MH SET - 2020, SET Exam - 2020,

Answer: D

There is no limit on the number of partners in a limited liability partnership.

The Limited Liability Partnership Act, 2008 requires at least two partners but sets no maximum. This makes the LLP form attractive to large professional firms such as accountancy and law firms.

Limits such as 10, 20 or 30 do not apply to an LLP. Ordinary partnership firms, by contrast, are restricted under the Companies Act, 2013 and its rules, which set a maximum of 50 partners for an unregistered association carrying on business.

Discuss in Forum

'Goodwill' of a partnership firm business is the property of the partnership under section ................ of Partnership Act, 1932.

A.14
B.15
C.16
D.17

Exam Year(s)

MH SET - 2021, SET Exam - 2021,

Answer: A

Goodwill is property of the firm under Section 14 of the Partnership Act, 1932.

Section 14 says that, subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired for the firm or for its business, and includes also the goodwill of the business.

Section 15 requires firm property to be held and used exclusively for the firm's business, Section 16 deals with personal profits earned by partners, and Section 17 with the rights and duties of partners after a change in the firm.

Discuss in Forum

The personal liability of a partner in limited liability partnership arises in :

A.Where a partner continues even the minimum number of partners falls below two to six months
B.Immediately after the number falls below two
C.Either (A) or (B)
D.Both (A) and (B)

Exam Year(s)

MH SET - 2023, SET Exam - 2023,

Answer: A

The key gives the first option: the partner is liable where business continues for more than six months after the partners fall below two.

Under section 6(2) of the Limited Liability Partnership Act, 2008, if an LLP carries on business with fewer than two partners for more than six months, the remaining partner who knows of it is personally liable for the LLP's obligations incurred during that period. The option prints this condition in garbled form, but it is the six-month rule.

Liability does not arise immediately after the number falls below two, since the Act gives six months of grace, so the second option, and the 'either' and 'both' options that include it, are wrong.

Discuss in Forum

An agreement without mentioning the terms of its existence is dealt under the Partnership Act, 1932 under Section :

Exam Year(s)

MH SET - 2024, SET Exam - 2024,

Answer: D

The provision is Section 7.

Section 7 of the Indian Partnership Act, 1932 defines a partnership at will: where no provision is made in the contract for the duration of the partnership or for its determination. Such a partnership can be dissolved by any partner giving notice to the others.

Section 4 defines partnership, section 5 says partnership arises from contract and not from status, and section 6 sets out the mode of determining whether a partnership exists.

Discuss in Forum

Which one of the following is correct statement ?

A.Every agency is partnership.
B.Every partnership is agency.
C.Every partnership is limited company.
D.Every private limited company is partnership.

Exam Year(s)

UGC NET - 2012,

Answer: B

Every partner is an agent of the firm for the purposes of the business of the firm and of the other partners, as section 18 of the Indian Partnership Act, 1932 provides, so every partnership involves agency. The reverse is not true, since an agency need not be a partnership, and a partnership is not a limited company and a private limited company is not a partnership. The answer is that every partnership is agency.

Discuss in Forum

10.

Read the following passage and match the column.

No suit to enforce a right arising from a contract shall be initiated in any court by any person suing as a partner in a non-registered firm. Registration of firms is not compulsory. There is no penalty for non-registration. An unregistered firm cannot sue any third person for the enforcement of any right arising from contract.

Column P	Column Q
a. Registration	1. No penalty
b. Non-registration	2. Optional
c. Partner of a registered firm	3. Unenforceability of his rights
d. Partner of a non-registered firm	4. Can sue

Codes : a b c d

A.1 2 3 4
B.2 1 4 3
C.2 1 3 4
D.1 3 2 4

Exam Year(s)

UGC NET - 2012,

Answer: B

Registration of a firm is optional, since the Indian Partnership Act does not make it compulsory. There is no penalty for non-registration, though an unregistered firm cannot sue third persons on contracts and a partner of a registered firm can sue. A partner of a non-registered firm cannot enforce his rights in a suit. So a matches 2, b matches 1, c matches 4 and d matches 3, which is the code 2 1 4 3. The answer is 2 1 4 3.

Partnership and LLP Questions and Answers

Topics

Other Subjects

Tags: Partnership and LLP Questions and Answers

About Us

Partnership and LLP Questions and Answers

Topics

Other Subjects

Tags: Partnership and LLP Questions and Answers

About Us

Stay informed about all important Dates & Notifications