Commercial Applications
Answer
Partnership — A partnership is a voluntary association of two or more persons who agree to carry on some business jointly and share its profits and losses. The persons who enter into partnership are individually called 'partners' and collectively a 'firm'. The name under which they carry on business is called the 'firm name'.
According to the Indian Partnership Act, 1932, "Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all."
According to L.H. Haney, "Partnership is the relation between persons competent to make contract, who agree to carry on a lawful business in common with a view to private gain."
Related Questions
Assertion (A): In a Limited Liability Partnership (LLP), the liability of the partners is limited to their agreed contribution.
Reasoning (R): An LLP is a hybrid form of business organisation combining features of a partnership and a joint-stock company.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.
A client sues a partnership firm for not delivering goods on time. The court orders all partners to pay compensation using their personal assets. What feature of partnership leads to this situation?
- Unlimited liability
- Mutual agency
- Sharing of profits and losses
- Restriction on transfer of interest
State three features of partnership.
A partnership firm operating a travel agency is facing legal issues because one partner took a loan in the firm's name without informing the other partners. How does the principle of mutual agency apply to this situation?