Commercial Applications
Meera, a partner in a firm, withdraws her share of capital without informing the other partners, resulting in financial strain on the firm. Which feature of partnership prevents such actions?
- Mutual consent among partners
- Written agreement
- Sharing of profits and losses
- Unlimited liability
Partnership
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Answer
Mutual consent among partners
Reason — Partnership is based on mutual trust, confidence, and mutual consent among partners. No partner can transfer his share or withdraw capital from the firm without the prior consent of all other partners. The feature of restriction on transfer of interest, which operates through mutual consent, prevents such unilateral actions by any partner.
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Related Questions
Statement I: Partnership is an association of two or more persons.
Statement II: Partnership is an agreement between two or more persons.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
Which of the following is NOT a demerit of partnership?
- Unlimited liability
- Limited Resources
- Secrecy
- Lack of public confidence
A company required funding for expansion but did not want unlimited liability for its partners. What type of partnership would best suit their needs?
- General Partnership
- Partnership at Will
- Limited Liability Partnership (LLP)
- Particular Partnership
In a partnership at will, any partner can dissolve the firm by giving notice to the other partners.
- True
- False