33 previous year questions on Partnership and limited liability partnership from UGC NET Law papers (2012–2026), including 4 assertion–reason, 7 match-the-list, 3 statement-based questions. The correct option is marked in green.
33 questions
Partnership is based on
Ans. (d) : Partnership arises from a contract. Mutual agency exists among partners. All partners, in relation to the partnership business, are agents of each other as well as principals simultaneously.
Which statements are correct?
An undisclosed principal can intervene against express terms
An undisclosed principal cannot intervene against express terms
Which statements are correct?
Partner has a duty of good faith
Partner has duty not to compete
Partner has duty of due diligence
Partner has duty to indemnify for fraud Codes:
Ans. (d) : General duties of partners — Section 9: (i) Carry on business for the greatest common advantage (ii) Be just and faithful to each other (iii) Keep the firm's correct accounts and render true information to partners. Section 11(2): A partner shall not carry on a business similar to that of the firm.
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: A. Registration B. Non Registration C. Partner of a registered firm D. Partner of a non-registered firm Column-Q:
No penalty
Optional
Unenforceability of his rights
Can sue Codes:
Ans. (b) : (i) Registration — Optional, i.e. registration of a partnership firm is not compulsory. The only benefit of registration is that it can be used as evidence. (ii) Non Registration — No penalty. There is no effect of non-registration of the firm. (iii) Partner of a registered firm — Can file a suit. (iv) Partner of a non-registered firm — Cannot enforce his rights.
Which statements are correct?
Partners have right to profit
Partners have right to attend general meeting
Partners have right to interest
Partners have right to appoint proxy Codes:
Ans. (d) : A partner has the right to profit. He is also entitled to receive interest. Hence statements one and three are correct while the remaining two statements are incorrect.
Essential feature of a partnership is
Agreement
Object to carry on a business
To share profits
Business is to be carried by all or any of them acting for all Codes:
Ans. (d) : According to Section 4 of Chapter 2 of 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.
Registration of a firm is
Ans. (b) : According to Section 69 of the Indian Partnership Act, registration of a firm is not compulsory, but if it is not registered, the rights arising under this Act cannot be enforced. As an exception, it can be enforced for dissolution of the firm, its accounts, etc.
Match an item in List-I with an item in List-II using codes given below: List-I (In case of partnership): A. Duty to account for personal profits B. Duty not to compete C. Duty of good faith D. Right to take part in business List-II (Case):
Pulin v. Mahendra, (1921) 34 Cal LJ 405
Suresh Kumar v. Amrit Kumar, AIR 1982 Del 131
Gardner v. Mc Cutcheon, 4 Beav. 534 (1842)
Helmore v. Smith, (1886) 35 Ch D. 436 Codes:
Ans. (d) : A. Duty to account for personal profits — Gardner v. Mc Cutcheon (1842) B. Duty not to compete — Pulin v. Mahendra (1921) C. Duty of good faith — Helmore v. Smith, 1986 D. Right to take part in business — Suresh Kumar v. Amrit Kumar
Match items in table A with items in table B, using codes given below: Table A: A. Essentials of partnership B. Partnership at will C. Effect of non-registration of firm D. Compulsory dissolution of firm Table B:
Section 41
Section 4
Section 7
Section 69 Code:
Ans. (b) : A. Essentials of partnership — Section 4 (Partnership Act) B. Partnership at will — Section 7 C. Effect of non-registration of firm — Section 69 D. Compulsory dissolution of firm — Section 41
Partnership is
Ans. (c) : Mutual agency Explanation: Partnership is defined in Section 4 of the Indian Partnership Act, whose essential elements are — (1) Two or more persons, (2) There must be an agreement, (3) There must be a business, (4) The object of the business must be to earn profit and share it among themselves, (5) Running of business, (6) The business must be carried on by all or any of them acting for all, i.e., mutual agency must be present, as established in Cox v. Hickman (1860).
Assertion (A): When something of valuable nature is acquired by a partner in breach of his duty in good faith, it is taken to be acquired for the benefit of all the partners and has to be accounted for to the firm. Reason (R): Partnership is a trust. Codes:
Ans. (c) : (A) is true, but (R) is false Explanation: Section 16(a) of the Indian Partnership Act 1932 provides that personal profit earned by a partner from the firm's property shall be given to the firm. Accordingly, it is the duty of the partner that any profit earned by him — (1) from the firm's transactions, (2) from any property of the firm, (3) from business connections, or (4) earned using the firm's name or use — must be accounted for and given to the firm.
Match items in List-I with items in List-II using the codes given below: List-I A. Liability for misappropriation by a partner B. Liability of a partner for torts C. Liability of a partner for holding out D. Doctrine of implied authority of a partner List-II
Section 26
Section 27
Section 28
Sections 18 and 19 Codes:
Ans. (d) : (a) Liability for misappropriation by a partner — Section 27 (b) Liability of a partner for torts — Section 26 (c) Liability of a partner for holding out — Section 28 (d) Doctrine of implied authority of a partner — Section 19
According to Section 12 of the Partnership Act, any difference arising as to ordinary matters connected with the business of partnership may be decided by
Ans. (c) : a majority of partners Explanation: According to Section 12 of the Partnership Act, any difference arising as to ordinary matters connected with the business of partnership shall be decided by a majority of partners.
Read Assertion (A) and Reason (R) and answer using codes given below: Assertion (A): Every partner is an agent of the other partner. Reason (R): Partnership is agency. Codes:
Ans. (d) : Both (A) and (R) are right and (R) is correct reason for (A) Explanation: Under Section 18 of the Indian Partnership Act 1932, every partner is an agent of the firm and his other partners. Since partnership is agency, both A and R are correct and R is the correct explanation of A.
Which are essentials of a partnership? Answer using codes given below:
A contract of two or more competent persons
Agreement to share profits
Mutual agency
Lawful business Code:
Ans. (d) : 1, 2, 3 and 4 Explanation: Under Section 4 of the Partnership Act 1932, partnership is a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Based on the above definition, the following are essential elements of partnership — (1) Contract of two or more competent persons, (2) Agreement to share profits, (3) Mutual agency, (4) Lawful business.
A partnership to create a monopoly
Twenty members forming a firm for tea trade on a railway platform
Trustees carry on business of a firm in their own name Codes:
Ans. (d) : 3 and 4 only Explanation: According to Section 4 of the Partnership Act, partnership is a relation between persons who have agreed to share the profits of a business. Therefore, for a banking firm, twenty members forming a partnership is valid. If a trustee firm carries on business in its own name and agrees to share profits with other partners, then it is a partnership firm.
The chapter named Registration of firms in Partnership Act is applicable to Hindu Trading Families
Registration of firms is designed primarily to protect third parties and the absence of registration need not prevent disappearance of an unregistered or imperfectly registered firm Codes:
Ans. (d) : Only (4) is correct Explanation: Section 69 of the Indian Partnership Act 1932 does not make registration mandatory, but registration is primarily designed to protect third parties. An unregistered firm's partner cannot sue as a partner. An unregistered firm cannot enforce its claims against third parties in the civil courts. An unregistered firm cannot file its own claims against third parties.
Who can be a partner in a firm? Answer using codes given below:
A trustee
Another firm
A Hindu undivided family
Wakfs Codes:
Ans. (c) : Only (1) Explanation: Out of the above four options, only a trustee firm can be a partner. Partnership relation arises from a contract and a contract requires the consent of two or more persons. Since a Hindu undivided family and a Wakf are not legal persons, they cannot be partners in a firm.
Read Assertion (A) and Reason (R) and answer by using codes below: Assertion (A): Salary drawn by a partner from the firm for his services rendered to it has been treated different from his right to get an additional amount in the form of salary as his share of the firm's profit. Reason (R): Because R.M. Chidambaram Pillai v. Commissioner of Income tax case laid down above principle. Codes:
Ans. (b) : Both (A) and (R) are wrong Explanation: In the case of R.M. Chidambaram Pillai v. Commissioner of Income Tax 1970, it was held that a firm is not a legal person. A salary drawn by a partner from the firm for his services rendered to it has not been treated differently from his right to get an additional amount in the form of salary as his share of the firm's profit.
Read Assertion (A) and Reason (R) and answer using codes given below: Assertion (A): Partner of an erstwhile unregistered partnership firm can bring a suit to enforce a right arising out of a contract falling within the ambit of section 69 of the Indian Partnership Act. Reason (R): Because Judgement in case of Loonkaran Sethia v. Ivon E. John laid down above judicial principle. Codes:
Ans. (b) : Both (A) and (R) are wrong Explanation: Section 69 clearly states that any partner of any firm can file a suit to enforce a right arising out of a contract falling under the ambit of this section only when the firm has been registered.
Match List-I with List-II and select the correct answer using the code given below: List-I A. Partnership not created by status B. Essentials of partnership C. Joint Hindu Family and partnership D. Partnership between outsiders and joint family List-II
CST v. K. Kelukutty
Kshetra Mohan v. Commr, of Excess Profit Tax
Rakesh Kumar Dinesh Kumar v. U.G. Hotels and Resorts Ltd.
Ganpat v. Annaji Code:
Ans. (a) : (A) Partnership not created by status — Rakesh Kumar, Dinesh Kumar v. U.G. Hotel and Resorts Ltd. (B) Essentials of partnership — C.S.T. v. K. Kelukutty (C) Joint Hindu Family and partnership — Ganpat v. Annaji (D) Partnership between outsiders and joint family — Kshetra Mohan v. Profit Commissioner of Excess Tax
Match List-I with List-II and select the correct answer using the code given below: List-I (Duties of partners) A. Duty of absolute good faith B. Duty not to compete and 13(f) C. Duty of due diligence D. Duty to indemnify for fraud List-II (Relevant section under the Indian Partnership Act)
Section 16(b)
Section 12(b)
Section 10
Section 9 Code:
Ans. (b) : (A) Duty of absolute good faith — Section 9 (B) Duty not to compete — Section 16(b) (C) Duty of due diligence — Section 12(b) (D) Duty to indemnify for fraud — Section 10
In which section of the Partnership Act it is laid down that there can be a partnership in a single or particular business venture?
Ans. (a) : Section 8 Explanation: Section 8 of the Indian Partnership Act provides for particular partnership. By particular partnership is meant when partnership is established for a particular business or project. For this, it is not necessary that the business be permanent or continuous. Such a partnership generally terminates when the particular task is completed.
Which one of the following is not within the scope of Implied Authority of a partner?
Ans. (c) : The act of acquiring immovable property on behalf of the firm Explanation: Section 19 of the Indian Partnership Act 1932 relates to the implied authority of a partner as agent of the firm. The partner's authority to bind the firm granted by Section 19 is called implied authority. According to Section 19, sub-section (ch), the act of acquiring immovable property on behalf of the firm does not fall within the implied authority of a partner.
Which of the following is/are true about Bill of Exchange?
A Bill of Exchange, requires in its inception two parties
A company can convert into Limited Liability Partnership: (A) By complying to requirements of the third schedule of Limited Liability Partnership Act, 2008 (B) It can convert if there is no security interest in its assets subsisting at the time of application (C) Partners of Limited Liability Partnership are the erstwhile shareholders of the company and no one else (D) All the assets, interests, rights and privileges of the company are transferred to the firm Choose the correct answer from the options given below:
Ans. (d) : Limited Liability Partnership (LLP) is seen as an alternative corporate business vehicle that provides the benefits of limited liability. Any firm, private company or any unlisted public company can convert itself into a Limited Liability Partnership. LLP is governed by the provisions of the Limited Liability Partnership Act, 2008.
Arrange the provisions of the Indian Partnership Act, 1932 in chronological order (section wise): (A) Partnership at will (B) Mode of determining the existence of the partnership (C) Property of a firm (D) Duties of a partner Choose the correct answer from the options given below:
Ans. (a) : The correct order of sections under the Indian Partnership Act, 1932 is: A. Mode of determining the existence of partnership — Section 6 B. Partnership at will — Section 7 C. General duties of partners — Section 9 D. Property of a firm — Section 14
Where the money received from a third party by the firm, in ordinary course of business, is misapplied by one of the partners to his own use, then:
Ans. (c) : According to Section 27 of the Indian Partnership Act, 1932, where — (a) a partner acting within his apparent authority receives money or property from a third party and misapplies it, or (b) a firm in the course of its business receives money or property from a third party, and any of the partners misapplies that money or property while it is in the custody of the firm, the firm is liable to make good the loss.
Every partner of a partnership firm is liable for all the acts of the firm done while he is a partner. This doctrine is called:
Ans. (a) : According to the Indian Partnership Act, 1932, every partner of a partnership firm is liable for all acts done by the firm only while he is a partner. This is called the doctrine of holding out. The doctrine of holding out is given under Section 28.
As per the Partnership Act, 1932 "Partnership" is defined under
Answer: (d) Section 4
Which provision of the Partnership Act explains the evidentiary value of entries in the Register of Firms?
Answer: (d) Section 68
Explanation: Section 68 of the Indian Partnership Act, 1932 discusses the evidentiary value of statements made in the Register of Firms, making them admissible in evidence.
Mark the incorrect statements about the circumstances in which Limited Liability Partnership (LLP) may be wound up by the tribunal
A. Where for a period of more than three months the number of partners is reduced to below two
B. If the LLP has acted against the interest of the sovereignty and integrity of India
C. If the LLP has made a default in filing with the Registrar the statement of account and solvency or Annual Return for any two consecutive financial years
D. If LLP is unable to pay its debts
Choose the correct answer from the options given below
Answer: (b) A, C only
Which of the following is NOT correct about the nature of limited liability partnership?
Answer: (d) It follows the principle of unlimited liability
Match the LIST-I with LIST-II LIST-I (Case Law) LIST-II (Related Concept)
A. Cox V/s Hickman I. Business must be taken in a practical sense
B. Stekel V/s Ellice II. Partnership between Karta and Coparcener
C. Lachhman Das V/s CIT III. Salaried partner
D. Smith V/s Anderson IV. Mutual Agency
Choose the correct answer from the options given below
Answer: (d) A-IV, B-III, C-II, D-I
Under the Limited Liability Partnership Act, 2008, Under Section 2(8), which of the following is not included in definition of "body corporate"?
Answer: (c) A Corporation Sole
Explanation: Under Section 2(1)(d) [often referred to under Section 2 definitions] of the Limited Liability Partnership Act, 2008, a "body corporate" means a company as defined under clause (20) of Section 2 of the Companies Act, 2013 and includes:
1. An LLP registered under the LLP Act, 2008.
2. An LLP incorporated outside India.
3. A company incorporated outside India. However, the section explicitly excludes:
• A corporation sole
• A co-operative society registered under any law for the time being in force
• Any other body corporate specified by the Central Government via notification Therefore, a Corporation Sole is explicitly excluded from the definition of a body corporate.
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