Q.A widow of a deceased partner receives a fixed share of a firm's profits every year as an annuity, but takes no part in managing the business and has no power to bind the firm. As per Section 6's Explanation, she is:
(A) A sleeping partner
(B) A partner by holding out
(C) Not a partner at all, despite receiving a share of profits
(D) A nominal partner

The Explanation to Section 6 lists a deceased partner's widow/child receiving an annuity out of profits as one of the standard examples of profit-sharing WITHOUT partnership, since mutual agency is absent.

Check the fact pattern against the real test of partnership — mutual agency — not merely against whether profits are shared.

The real test of partnership under Section 6 is mutual agency, not merely sharing of profits, which is only prima facie evidence. The Explanation to Section 6 expressly lists a widow or child of a deceased partner receiving a portion of profits as an annuity as a case where profit-sharing does NOT create a partnership, because the recipient has no right to manage the business and no power to bind the firm.

Option-by-option analysis:

• (A) Incorrect — a sleeping partner, despite not managing the firm, is still a genuine partner with full liability; the widow here is not a partner of any kind.
• (B) Incorrect — partner by holding out (Section 28) requires the person to represent themself, or be knowingly represented, as a partner; nothing here suggests that.
• (C) Correct — she is not a partner at all, exactly as the Explanation to Section 6 states.
• (D) Incorrect — a nominal partner lends their name and is treated as liable to outsiders; the widow here does neither.