In a partnership firm, unless the Deed provides otherwise, the liability of each partner for the firm's debts is: (a) Limited to the capital contributed (b) Limited to a fixed amount set by the senior-most partner (c) Unlimited and joint with the other partners (d) Restricted to

Question

In a partnership firm, unless the Deed provides otherwise, the liability of each partner for the firm's debts is: (a) Limited to the capital contributed (b) Limited to a fixed amount set by the senior-most partner (c) Unlimited and joint with the other partners (d) Restricted to the partner's own share of profits only

Accepted Answer

One of the essential features of partnership (drawn from Section 4 and the general scheme of the Indian Partnership Act, 1932) is that every partner's liability for the firm's debts is unlimited, and it is joint and several with the other partners — a creditor of the firm can recover the entire outstanding debt from the personal assets of even a single partner, who may then seek contribution from the rest. Options (a) and (d) describe the kind of limited liability found in a company (limited to shares held) or in a minor admitted to the benefits of partnership (limited to his …

Start your 14-day free trial to unlock the full solution →

Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2024Set MARCH1 markMCQ
$Q. A Partnership is formed by ______.$
(a) the direction of Government
(b) agreement
(c) friendship
(d) relationship among persons
›Reveal solutionSolution

A partnership is formed by an agreement, option (b).

Under the Indian Partnership Act, 1932, partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The very foundation of a partnership is a contract (agreement) among the partners; this agreement may be oral or written, and when written it is called the partnership deed.

…

Start your 14-day free trial to see the full solution →
CBSE 2022Set MARCH1 markMCQ
$Q. A partnership is formed by ________.$
(a) the direction of government
(b) agreement
(c) friendship
(d) relationship among persons
›Reveal solutionSolution

The answer is option (b) agreement.

According to the Indian Partnership Act, 1932, partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The key point is that this relationship arises out of a contract (agreement), not out of status, birth, friendship or any government direction. The agreement may be oral or writte …

Start your 14-day free trial to see the full solution →
CBSE 2020Set MARCH1 markMCQ
$Q. A partnership is formed by ________.$
(a) agreement
(b) relationship among persons
(c) the direction of government
(d) friendship
›Reveal solutionSolution
The correct answer is (a) agreement. Partnership is the result of an agreement (contract) between persons, not of status, relationship or government direction.

Under the Indian Partnership Act, 1932, partnership is "the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all." The key word is agreed:

Partnership arises from an agreement — a voluntary contract among the partners. This may be oral or written (a written one is the Partnership Deed). Hence (a) is correct.

It is not created merely by a relationship among persons — for example, members of a Hindu Undivided Family are related but that is not a partnership. …
Start your 14-day free trial to see the full solution →

Q.In a partnership firm, unless the Deed provides otherwise, the liability of each partner for the firm's debts is:

Concept understanding — Meaning and Features of Partnership

Q.In a partnership firm, unless the Deed provides otherwise, the liability of each partner for the firm's debts is:

🎓Unlock everything free for 14 days

Unlock everything free for 14 days