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THE INDIAN PARTNERSHIP ACT, 1932 |
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CHAPTER I |
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PRELIMINARY |
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What the “Preamble” of the Indian Partnership Act, 1932 states? |
An Act to define and amend the law relating to partnership |
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What does the "short title" in Section 1 of an Act signify? |
The brief name by which the Act is commonly known |
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What is the Act no. of the Indian Partnership Act, 1932? |
ACT NO. 9 OF 1932 |
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What is the main objective of the "extent" clause in Section 1?
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To specify the geographical area where the Act applies |
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What does the "Commencement" under Section 1 refers to? |
The date on which the Act becomes legally enforceable |
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When did the Indian Partnership Act, 1932 come into force? |
1st day of October, 1932 |
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When did section 69 of the Indian Partnership Act, 1932 come into force? |
1st day of October, 1933 |
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The Indian Partnership Act, 1932 extends to? |
Whole of India |
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Which official medium is generally used to notify the commencement of an Act? |
Official Gazette |
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The extent clause helps in identifying? |
The states and territories where the Act is applicable |
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In which case did the court hold that a law cannot be enforced unless it is published? |
B Harla v. State of Rajasthan |
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What was the key principle laid down in Harla v. State of Rajasthan (1951)? |
A law must be published to be enforceable |
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If an Act says “this Act shall come into force on a date as the Central Government may notify,” it means? |
It becomes enforceable only upon notification |
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The short title of an Act is useful for? |
Referring to the Act conveniently in legal documents |
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The phrase “shall extend to the whole of India” includes? |
All states and union territories unless excluded |
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Which part of Section 1 allows the government to defer enforcement? |
Commencement clause |
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Which provision deal with “Definitions”? |
Sec.2 |
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Which provision deal with an “act of a firm”? |
Sec.2(a) |
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What does the term “act of a firm” under Section 2(a) primarily refer to? |
any act or omission by all the partners, or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm |
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Which case confirmed that acts done by a partner in the usual course of business bind the firm? |
Mercantile Credit Co. Ltd. v. Garrod |
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According to Section 2(a), if a partner acts beyond his authority, the act is? |
Binding only if the firm ratifies the act |
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In which case it was held that the firm is liable for acts of a partner done in the ordinary course of business? |
Morris v. Kanssen |
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What is the legal effect of an “act of a firm” done by a partner with apparent authority? |
It binds the firm towards third parties |
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What is the role of courts in disputes over “act of a firm”? |
Decide if the act was within partner’s authority |
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Which provision deal with “business”? |
Sec.2(b) |
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What does Section 2(b) define as “business”? |
Every trade, occupation, or profession carried on by a firm |
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Which case clarified that “business” under Section 2(b) includes professions? |
Cox v. Hickman |
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According to Section 2(b), a “business” can be carried on? |
For any lawful purpose including non-profit |
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Which case held that the nature of business must be lawful and not illegal? |
Mohori Bibee v. Dharmodas Ghose |
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What would NOT be considered “business” under Section 2(b)? |
Personal investments by a partner |
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The case of Mercantile Credit Co. Ltd. v. Garrod is significant because it? |
Discussed the scope of “business” in partnership |
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Which type of occupation is covered under “business” in Section 2(b)? |
Professional occupations like doctors, lawyers |
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Under Section 2(b), can a partnership exist solely for charitable purposes? |
Yes, if the purpose is lawful |
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Which provision deal with “prescribed”? |
Sec.2(c) |
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What does the term “prescribed” means? |
prescribed by rules made under this Act |
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What does the term “prescribed” generally mean under Section 2(c)? |
Something laid down or fixed by authority or law |
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Which case emphasized the importance of following “prescribed” procedures in contracts? |
Ramlal v. Khanna Lal |
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Which case ruled that failure to follow “prescribed” form invalidates the act? |
K.K. Verma v. State of U.P. |
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Which provision deal with “third party”? |
Sec.2(d) |
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What does the term “third party” denotes? |
used in relation to a firm or to a partner therein, means any person who is not a partner in the firm |
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A “third party” can rely on? |
Acts done by partners within their authority |
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Which case held that third parties dealing with the firm in good faith are protected? |
Mercantile Credit Co. Ltd. v. Garrod |
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Which case involved the rights of third parties against unauthorized acts by a partner? |
Lee v. Knapp |
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When can a third party hold the firm liable for acts of a partner? |
When the partner acts within the scope of authority, When the partner acts outside authority but firm ratifies |
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If a third party knowingly deals with a partner acting fraudulently, the firm? |
Is not bound by the act |
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How third parties generally treated under partnership law? |
As outsiders entitled to protection when dealing with the firm |
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What happens if a third party deals with a partner who has no authority and the firm does not ratify? |
Contract is not binding on the firm |
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Which case ruled that third parties need not verify partner’s authority beyond apparent authority? |
Morris v. Kanssen |
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Can a third party sue the firm directly for breach of contract? |
Yes, if contract is made by partner in ordinary course of business |
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Which case is often cited regarding third party rights in partnership law? |
Mercantile Credit Co. Ltd. v. Garrod |
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Which provision deal with “Application of provisions of Act 9 of 1872”? |
Sec.3 |
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Section 3 states that provisions of Act 9 of 1872 apply to partnership firms except where? |
They conflict with the Partnership Act |
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Act 9 of 1872 is commonly known as? |
The Indian Contract Act |
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Which case highlighted the application of Contract Act provisions to partnership agreements? |
Lalman Shukla v. Gauri Dutt |
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According to Section 3, if any provision of Act 9 of 1872 is inconsistent with the Partnership Act, then? |
The Partnership Act provision prevails |
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The Indian Contract Act 1872 governs? |
General contracts including partnership contracts |
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Section 3 ensures that partnership agreements are subject to? |
Contract law principles under Act 9 of 1872 |
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What the Indian Contract Act 1872 helps to determine? |
Validity of partnership contracts |
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CHAPTER II |
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THE NATURE OF PARTNERSHIP |
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Which provision deal with “Definition of “partnership”, “partner”, “firm” and “firm name”? |
Sec.4 |
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What is the correct definition of “partnership” as per Section 4? |
Relation between two or more persons who agree to share profits of a business carried on by all or any of them acting for all |
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Who is termed a “partner” under Section 4? |
A person who shares the profits of the business carried on by the firm |
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What best defines a “firm” under Section 4? |
The name under which the partners carry on business |
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What does the “Firm name” refers to? |
The trade name or business name under which the partnership operates |
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Which case clarified that sharing of profits is a key test of partnership? |
Cox v. Hickman |
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Persons who have entered into partnership with one another are called? |
individually “partners” |
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Mere sharing of gross returns does not create? |
Partnership |
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When a “partner” is bound by the acts of the firm? |
The act is done in the usual course of business of the firm |
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Which case held that a partner must act within authority for the firm to be bound? |
Lee v. Knapp |
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What the term “firm” legally means? |
The collective association of partners |
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Which case emphasized that the “firm name” should not mislead third parties? |
Mercantile Credit Co. Ltd. v. Garrod |
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What distinguishes a “partner” from a mere agent? |
Sharing of profits and losses |
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What is NOT necessarily a partner? |
A person who receives a fixed salary only |
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The test of “holding out” can create? |
Partnership by estoppel |
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Under Section 4, a “firm” may exist even if? |
No written agreement exists between partners |
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Which case clarified that partnership is a relationship and not a separate legal entity? |
Lee v. Knapp |
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“Firm name” protection is important? |
Avoid confusion among third parties |
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What is Sharing of profits? |
Prima facie evidence of partnership |
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Which case held that persons sharing profits from a business are presumed to be partners? |
Cox v. Hickman |
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Which provision deal with “Partnership not created by status”? |
Sec.5 |
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The relation of partnership arises from? |
contract and not from status |
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The members of a Hindu undivided family carrying on a family business or a Burmese Buddhist husband and wife carrying on business? |
are not partners in such business |
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According to Section 5, can partnership be created merely by the status of being a relative? |
No, status alone does not create partnership |
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Section 5 implies that partnership is created by? |
Agreement to share profits of business |
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Which case ruled that sharing of profits alone is not always conclusive proof of partnership? |
Cox v. Hickman |
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According to Section 5, is the status of executor or administrator enough to form a partnership? |
No |
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What distinguishes a partner from a mere status holder? |
Active participation in business and profit sharing |
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Which case clarified that joint ownership of property does not create partnership? |
Cox v. Hickman |
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Section 5 helps avoid confusion by specifying that? |
Status like trustee or relative alone cannot create partnership |
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Which case established that a relative sharing profits as gift is not a partner? |
Lee v. Knapp |
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Can an agent or employee become a partner by virtue of their position alone? |
No |
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Section 5 prevents assuming partnership based on? |
Status or relation without agreement |
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Which case discussed that receiving profits as repayment of loan does not create partnership? |
Cox v. Hickman |
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Is being a guarantor for a partner enough to become a partner under Section 5? |
No |
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Section 5 protects? |
Third parties from wrongful assumption of partnership |
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Which case clarified that a joint family business member is not automatically a partner by status? |
Lee v. Knapp |
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What is required to create partnership under Section 5? |
Express or implied agreement to share profits of business |
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Can a trust estate be considered a partner by virtue of status? |
No |
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Which case emphasized that partnership requires active cooperation beyond mere status? |
Lee v. Knapp |
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Section 5 primarily clarifies that partnership? |
Contractual relationship, not a status |
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Which provision deal with “Mode of determining existence of partnership”? |
Sec.6 |
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In determining whether a group of persons is or is not a firm, or whether a person is or is not a partner in a firm, regard shall be had to? |
The real relation between the parties, as shown by all relevant facts taken together. |
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The sharing of profits or of gross returns arising from property by persons holding a joint or common interest in that property? |
Does not of itself make such persons partners. |
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The receipt by a person of a share of the profits of a business, or of a payment contingent upon the earning of profits or varying with the profits earned by a business? |
does not of itself make him a partner with the persons carrying on the business |
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The receipt of which share or payment does not of itself make the receiver a partner with the persons carrying on the business? |
by a lender of money to persons engaged or about to engage in any business |
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The receipt of which share or payment does not of itself make the receiver a partner with the persons carrying on the business? |
by a servant or agent as remuneration |
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The receipt of which share or payment does not of itself make the receiver a partner with the persons carrying on the business? |
by the widow or child of a deceased partner, as annuity |
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The receipt of which share or payment does not of itself make the receiver a partner with the persons carrying on the business? |
by a previous owner or part owner of the business, as consideration for the sale of the goodwill or share thereof |
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Under Section 6, what is the primary test to determine the existence of a partnership? |
Sharing of profits |
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Which case ruled that sharing of profits is prima facie evidence of partnership? |
Cox v. Hickman |
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According to Section 6, what is NOT sufficient alone to prove partnership? |
Receipt of interest on loan |
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Which case held that a person receiving profits as payment of debt is NOT a partner? |
Cox v. Hickman |
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Section 6 allows the court to look beyond profit sharing and consider? |
Conduct of parties and mutual agency |
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Which case established that a person holding himself out as partner can be held liable? |
Mercantile Credit Co. Ltd. v. Garrod |
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What is a key factor in determining partnership existence? |
Mutual agency |
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Under Section 6, if profit sharing is a result of a loan repayment, is partnership created? |
No |
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Section 6 suggests that the court may consider what in absence of clear agreement? |
Conduct of parties and sharing of losses |
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Which case clarified that receipt of share of profits as salary does NOT create partnership? |
Lee v. Knapp |
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Which is NOT a mode of determining partnership existence? |
Joint ownership of property alone |
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The mode of determining partnership involves examination of? |
Agreement, conduct, and representations |
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Which case ruled that sharing gross returns without sharing losses is insufficient for partnership? |
Cox v. Hickman |
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What does Mutual agency means? |
Each partner can bind the firm by acts done in the course of business |
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Which case stated that a partner’s authority to bind the firm depends on the usual course of business? |
Lee v. Knapp |
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The absence of which factor may negate the existence of partnership despite profit sharing? |
Agreement to share losses |
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Can an oral agreement suffice to establish partnership existence? |
Yes, if other factors confirm |
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Which case held that even an ostensible partner may be held liable under partnership law? |
Mercantile Credit Co. Ltd. v. Garrod |
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What is a “partnership at will” under Section 7? |
Partnership where no fixed duration is agreed upon |
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Under a partnership at will, how can the partnership be dissolved? |
By any partner giving notice to others |
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Which case explained the nature of “partnership at will”? |
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas |
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In a partnership at will, can a partner be expelled without cause? |
No, a partner cannot be expelled without cause |
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What is true about the duration of partnership at will? |
It continues until dissolved by notice |
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Can a partnership at will be converted into a fixed-term partnership? |
Yes, by agreement of all partners |
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What happens if a partner gives notice to dissolve a partnership at will? |
The partnership dissolves at the end of notice period |
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Under Section 7, is there any legal limit to the notice period for dissolution in partnership at will? |
No fixed legal limit |
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Can a partner in a partnership at will claim damages for wrongful dissolution? |
Generally, no, unless wrongful conduct is proven |
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Can a partner waive the right to dissolve a partnership at will? |
Yes, by express agreement |
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Which provision deal with “Particular partnership”? |
Sec.8 |
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When a person may become a partner with another person? |
in particular adventures or undertakings |
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What does Section 8 define as a “particular partnership”? |
Partnership formed for a single venture or specific undertaking |
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How is a particular partnership different from a general partnership? |
It is for a specific project and dissolves after completion |
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Which case discussed the nature of particular partnership? |
Mohori Bibee v. Dharmodas Ghose |
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Under Section 8, when does a particular partnership automatically dissolve? |
On completion or termination of the specific undertaking |
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Which best describes the liability of partners in a particular partnership? |
Joint and several for the particular venture only |
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Can partners in a particular partnership carry on any other business under the same partnership? |
No, only the specific undertaking |
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According to Section 8, what happens if the particular partnership’s venture is delayed? |
Partnership continues until completion |
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Section 8 indicates that a particular partnership? |
Limited to the scope of the specific business venture |
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What is a key characteristic of a particular partnership? |
Specific object and limited duration |
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Can a partner withdraw from a particular partnership before completion of the venture? |
Generally, no, unless agreed |
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What is the effect of death of a partner in a particular partnership? |
Partnership dissolves unless agreed otherwise |
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Can a particular partnership exist without a formal written agreement? |
Yes, can be implied from conduct |
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Can a particular partnership be sued for liabilities beyond the scope of the particular venture? |
No, liabilities are limited to the venture |
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Section 8 partnership is also known as? |
Partnership for a specific adventure |
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What happens if the particular partnership is not dissolved after completion of the venture? |
It may be treated as general partnership |
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CHAPTER III |
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RELATIONS OF PARTNERS TO ONE ANOTHER |
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Which provision deal with “General duties of partners”? |
Sec.9 |
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What is a general duty of a partner under Section 9? |
To carry on the business of the firm to the greatest common advantage of the partners |
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According to Section 9, a partner must act? |
In good faith towards other partners |
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Which case emphasized the duty of utmost good faith among partners? |
Bedi v. Ghai |
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Under Section 9, partners have a duty to? |
Render true accounts and full information of all things affecting the firm to any partner or legal representative |
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Which case established that partners must disclose all material facts relating to the firm? |
Bedi v. Ghai |
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Under Section 9, a partner is bound to? |
Carry on the business with due diligence and care |
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Which duty requires partners to share losses as well as profits? |
Duty to bear losses proportionally |
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In which case a partner held liable for breach of fiduciary duty? |
Bedi v. Ghai |
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What is the effect of a partner acting against the interest of the firm? |
Partner can be held liable for breach of duty |
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According to Section 9, a partner must? |
Not compete with the firm |
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Which case clarified that a partner cannot secretly make a profit at the expense of the firm? |
Bedi v. Ghai |
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Which duty involves the obligation to inform other partners of all relevant business matters? |
Duty to communicate and disclose |
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Under Section 9, can a partner bind the firm by unauthorized acts? |
No, only acts within authority bind the firm |
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What is the partner’s duty regarding use of firm property? |
Use only for the firm’s business |
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Which case dealt with breach of duty by misuse of firm property? |
Bedi v. Ghai |
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What is the consequence of breach of general duties by a partner? |
Liability to compensate the firm for any loss caused |
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Which duty involves acting within the scope of authority given by the partnership? |
Duty of due diligence and care |
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Under Section 9, a partner’s duty includes? |
Co-operation with other partners in running the business |
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Which case held that partners owe fiduciary duties similar to those of trustees? |
Bedi v. Ghai |
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What does the general duty of partners aim to ensure? |
Trust, transparency, and mutual benefit |
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Which provision deal with “Duty to indemnify for loss caused by fraud”? |
Sec.10 |
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Under Section 10, when is a partner liable to indemnify the firm? |
When loss is caused by fraud committed by the partner |
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Which case established the principle that a partner must indemnify the firm for losses due to fraudulent acts? |
K.K. Verma v. Union of India |
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Section 10 imposes liability on a partner for? |
Loss arising from his fraud committed in the conduct of the firm’s business |
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What is the scope of indemnity under Section 10? |
Indemnify for all losses directly caused by the partner’s fraud |
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Which case held that a partner cannot escape liability for fraud by claiming lack of knowledge of other partners? |
K.K. Verma v. Union of India |
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Under Section 10, can a partner be indemnified for losses caused by negligence but not fraud? |
No, only losses caused by fraud require indemnity |
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What is the legal effect if a partner commits fraud and causes loss to the firm? |
Partner must compensate or indemnify the firm for the loss |
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According to case law, does the duty to indemnify extend to loss caused by fraud outside the ordinary business? |
No, only fraud committed in the conduct of the business |
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What is NOT covered under Section 10? |
Loss caused by honest mistakes |
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Can the firm sue the partner individually for indemnity under Section 10? |
Yes, the firm can sue the partner for recovery of loss |
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Which case clarified that partners are jointly liable for losses caused by fraud of any one partner? |
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas |
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Under Section 10, the indemnity obligation applies? |
Only to the partner who committed the fraud |
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Section 10 applies when fraud is committed? |
In the course of conducting firm’s business |
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The primary objective of Section 10 is to? |
Protect the firm from losses caused by fraudulent partners |
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Which provision deal with “Determination of rights and duties of partners by contract between the partners. Agreements in restraint of trade”? |
Sec.11 |
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Under Section 11, the rights and duties of partners are primarily determined by? |
Contract between the partners |
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What happens if there is no contract specifying rights and duties among partners? |
Provisions of the Partnership Act apply by default |
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Which type of agreement can restrict a partner from carrying on a similar business after leaving the firm? |
Agreement in restraint of trade |
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Are agreements in restraint of trade generally enforceable under law? |
No, unless reasonable and necessary to protect legitimate interests |
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Which case established the principle that agreements in restraint of trade are void unless reasonable? |
Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co. Ltd. |
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Under Section 11, can partners alter their rights and duties by mutual agreement? |
Yes, partners are free to agree on their rights and duties |
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What is the test for validity of an agreement in restraint of trade? |
Reasonableness in terms of duration and geographical area |
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Can an agreement in restraint of trade prohibit a partner from starting a similar business anywhere in the world indefinitely? |
No, such an agreement is generally void as unreasonable |
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What is a valid way to determine partners’ duties? |
Written partnership agreement |
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What is the effect of a partner breaching an agreement in restraint of trade? |
Injunction or damages may be awarded to the firm |
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Can partners change their duties without amending the contract? |
No, changes require mutual consent and contract modification |
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If partners have conflicting rights in the contract, how is the conflict resolved? |
By interpreting the contract and applying relevant law |
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Can an oral contract determine rights and duties of partners? |
Yes, but proving terms may be difficult |
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Section 11 allows partners to regulate what by contract? |
Profit sharing, decision-making, duties, and obligations |
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What is the legal position if a partner violates the contract on duties and rights? |
Other partners can seek remedy including damages |
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Can partners include clauses limiting liability in their contract? |
Yes, subject to legality and fairness |
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What is the key principle underlying Section 11? |
Freedom of contract among partners to decide rights and duties |
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What provision deal with “the conduct of the business”? |
Sec.12 |
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Under Section 12, Who has the authority to conduct the business of the firm? |
All partners or as agreed among partners |
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Whether every partner is bound to attend diligently to his duties in the conduct of the business? |
Yes |
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Whether any difference arising as to ordinary matters connected with the business be decided by a majority of the partners? |
Yes
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Whether the partner have the right to express his opinion before the matter is decided, but no change may be made in the nature of the business without the consent of all the partners? |
Yes
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What is the default rule for conducting business if no agreement exists among partners? |
All partners have equal rights in conducting business |
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Can a partner bind the firm by acts done in the ordinary course of business? |
Yes, unless other partners have limited his authority |
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Whether the partner has a right to have access to and to inspect and copy any of the books of the firm? |
Yes
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If a partner acts beyond his authority, is the firm bound? |
No, unless ratified by other partners |
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Section 12 emphasizes the business must be conducted? |
In good faith and for benefit of the firm |
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Which case ruled that good faith is essential in conducting partnership business? |
Lee v. Knapp |
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Can a partner enter into contracts with third parties on behalf of the firm? |
Yes, if within the scope of business and authority |
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What happens if a partner fraudulently conducts business? |
Firm can claim indemnity from the partner |
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Does a partner have the right to delegate business conduct? |
No, partners must conduct business personally unless agreed otherwise |
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If a partner makes a secret profit in business, what is the legal consequence? |
He must account for the profit to the firm |
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Can a partner exclude other partners from conducting business? |
No, unless agreed otherwise in contract |
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Which provision deal with “Mutual rights, and liabilities”? |
Sec.13 |
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Whether a partner is entitled to receive remuneration for taking part in the conduct of the business? |
No
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Whether the partners are entitled to share equally in the profits earned, and shall contribute equally to the losses sustained by the firm? |
Yes
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Whether a partner is entitled to interest on the capital subscribed by him such interest shall be payable only out of profits? |
Yes
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Whether the firm indemnifies a partner in respect of payments made and liabilities incurred by him in the ordinary and proper conduct of the business? |
Yes
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Whether the firm indemnifies a partner in respect of payments made and liabilities incurred by him in doing such act, in an emergency, for the purpose of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under similar circumstances? |
Yes
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Whether a partner shall indemnify the firm for any loss caused to it by his willful neglect in the conduct of the business of the firm? |
Yes
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Under Section 13, the mutual rights and liabilities of partners are determined by? |
Partnership agreement and provisions of the Act |
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What is a mutual right of partners? |
Right to participate in the management of the firm |
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Partners are mutually liable for? |
All debts and obligations incurred while conducting business |
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What is the nature of partner’s liability for firm debts? |
Joint and several liability |
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Which case held that partners are jointly and severally liable for firm debts? |
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas |
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Can one partner bind the firm and other partners by his acts? |
Yes, if done in the ordinary course of business |
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Which provision deal with “the property of the firm”? |
Sec.14 |
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Whether the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the course of the business of the firm, and includes the goodwill of the business? |
Yes
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The property and rights and interests in property acquired with money belonging to the firm are deemed to have been |
acquired for the firm |
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According to Section 14, property acquired by the firm must be? |
Belong exclusively to the firm |
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What is the nature of property bought with firm’s money? |
Firm property, regardless of whose name it is in |
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Which case held that property bought with firm funds is presumed to be firm property? |
Mohori Bibee v. Dharmodas Ghose |
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If a partner purchases property in his own name with firm money, the property? |
Is held by him in trust for the firm |
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Can a partner sell firm property without consent of other partners? |
No, not without consent |
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Which case discussed the rights of partners regarding firm property use? |
Lee v. Knapp |
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Who is entitled to possession of firm property? |
All partners jointly |
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Property purchased in partner’s name but with firm funds? |
Firm property, held in trust |
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What is NOT considered as firm property? |
Property acquired for personal use by a partner without firm funds |
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Can firm property be used for personal purposes by a partner without consent? |
No, it amounts to breach of trust |
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Which case confirmed firm property is distinct from partner’s personal property? |
Mohori Bibee v. Dharmodas Ghose |
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In case of dissolution, who has the right to firm property? |
Partners or their representatives for winding up |
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Which type of property can be classified as firm property? |
Property acquired for carrying on partnership business |
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How should disputes regarding firm property ownership be resolved? |
According to partnership agreement or law |
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Which case held that firm property must be used only for partnership purposes? |
Lee v. Knapp |
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If a partner uses firm property without consent for personal gain, what is the consequence? |
Must account for profits and indemnify the firm |
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The term “property of the firm” includes? |
All assets bought with partnership funds |
|
Who can sue for wrongful possession of firm property? |
Any partner on behalf of the firm |
|
If property is bought in a partner’s name with firm money, can it be considered personal property? |
No, it is trust property of the firm |
|
Which principle governs the ownership of firm property when bought with firm funds? |
Trust and agency principle |
|
Which provision deal with “Application of the property of the firm”? |
Sec.15 |
|
According to Section 15, the property of the firm must be applied? |
For the payment of firm’s debts and liabilities |
|
What is the order of applying firm property in case of dissolution? |
Pay firm’s debts, then repay partners’ advances, then capital, then profits |
|
Can firm property be applied for private claims of partners? |
No, only for firm obligations |
|
Who has the right to decide on the application of firm property? |
Partners collectively or according to agreement |
|
What happens if firm property is insufficient to pay debts? |
Partners are personally liable for the balance |
|
In what order are partners repaid after firm debts? |
Advances first, then capital, then profits |
|
Is firm property liable to satisfy individual partner’s debts? |
No, firm property is separate from personal debts |
|
Which case recognized that firm property must be used to satisfy firm obligations first? |
Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas |
|
Can a partner claim firm property for personal loans without agreement? |
No, partner cannot use firm property for personal loans |
|
Who bears loss if firm property is misapplied? |
Partners jointly and severally |
|
What does the term “Application of the property of the firm” primarily refer to? |
Payment of firm’s debts, liabilities, and distribution of surplus |
|
If a partner applies firm property for personal use, this act is? |
A breach of trust and liable to indemnity |
|
Which case held that firm property application must follow partnership agreement? |
Lee v. Knapp |
|
On dissolution, if surplus remains after paying debts and capital, it should be? |
Distributed among partners according to profit-sharing ratio |
|
Are creditors entitled to directly claim firm property? |
No, they must sue the firm or partners first |
|
When firm property is applied wrongly, partners can? |
Sue for damages or restitution |
|
Can a partner apply firm property for his private debts after dissolution? |
Only after firm debts and partners’ dues are settled |
|
Which provision deal with “Personal profits earned by partners”? |
Sec.16 |
|
What happen if a partner derives any profits for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name? |
he shall account for that profit and pay it to the firm |
|
According to Section 16, a partner must? |
Account to the firm for any personal profits made in connection with the firm’s business |
|
Which case held that a partner cannot make secret profits without accounting to the firm? |
Boardman v. Phipps |
|
If a partner earns profit using firm’s property without consent, he? |
Must account for that profit to the firm |
|
What is the legal principle behind Section 16? |
No partner shall make a secret profit at the expense of the firm |
|
Whether a partner derives any profits for himself from any transaction of the firm, or from the use of the property or business connection of the firm or the firm name, he shall account for that profit and pay it to the firm? |
Yes
|
|
Whether a partner carries on any business of the same nature as and competing with that of the firm, he shall account for and pay to the firm all profits made by him in that business? |
Yes
|
|
Which case defined “fiduciary duty” of partners regarding profits? |
Boardman v. Phipps |
|
Can a partner use firm’s opportunities to make personal profits without informing other partners? |
No, it breaches fiduciary duty |
|
If a partner makes profit by competing with the firm, what is the consequence? |
Must account profit to the firm and may face damages |
|
Section 16 applies to profits earned? |
In connection with the firm’s business only |
|
Which case ruled that profits made by misuse of firm information belong to the firm? |
Boardman v. Phipps |
|
If a partner secretly acquires property for personal benefit related to firm business, he? |
Must disclose and account for it |
|
What is the remedy if a partner breaches Section 16? |
Firm can sue for recovery of profits |
|
Fiduciary duty under Section 16 requires partners to? |
Avoid conflict of interest and not make secret profits |
|
Which case held that undisclosed profit made by a partner must be restored to the firm? |
Boardman v. Phipps |
|
If a partner exploits firm’s confidential information to earn profit, the profit is? |
Belongs to the firm |
|
Can a partner waive the right to account for personal profits? |
Only if all partners agree explicitly |
|
Section 16 discourages? |
Self-dealing by partners at the firm’s expense |
|
What is the effect of breach of Section 16 on partnership trust? |
It damages trust and may lead to dissolution |
|
Which authority governs the recovery of personal profits under Section 16? |
Courts or arbitration as per partnership agreement |
|
A partner making secret profit without disclosure may face? |
Legal action for breach of fiduciary duty |
|
What is an example of personal profit under Section 16? |
Partner buying goods for firm’s client using firm information and selling personally |
|
Which provision deal with “Rights and duties of partners—after a change in the firm, after the expiry of the term of the firm, and where additional undertakings are carried out”? |
Sec.17 |
|
After a change in the firm, the rights and duties of the partners? |
remain the same as they were immediately before the change |
|
When the term of a fixed partnership expires, partners? |
Cease to be partners but remain liable for previous acts |
|
According to Section 17, where additional undertakings are carried out after the firm’s term, partners? |
Are entitled to share profits from those undertakings unless agreed otherwise |
|
Where a firm constituted for a fixed term continues to carry on business after the expiry of that term so far as they may be consistent with the incidents of partnership at will? |
the mutual rights and duties of the partners remain the same as they were before the expiry |
|
Where a firm constituted to carry out one or more adventures or undertakings carries out other adventures or undertakings? |
the mutual rights and duties of the partners in respect of the other adventures or undertakings are the same as those in respect of the original adventures or undertakings |
|
Which case clarified the liability of partners after the expiry of partnership term? |
Lee v. Knapp |
|
What happens to debts incurred after expiry of the term but before dissolution? |
Partners remain liable if business is continued |
|
Can new partners join after the expiry of the firm’s term without forming a new partnership? |
Only with consent of all existing partners |
|
Section 17 states that after a change in the firm, partners must? |
Adjust rights and liabilities according to the new agreement |
|
Which case held that a partner’s liability continues for acts done before dissolution? |
Lee v. Knapp |
|
After expiry of partnership term, if partners carry on additional business, the profits? |
Are shared according to old partnership unless otherwise agreed |
|
What is the duty of partners carrying on business after expiry of term? |
To act in good faith and settle accounts with old partners |
|
Which case clarified rights of partners where additional undertakings are carried out after expiry? |
Cox v. Hickman |
|
What happen if a partner acts without authority after expiry of firm’s term? |
Personally liable for such acts |
|
The rights of partners after change in firm are determined by? |
Contract among partners or law if no contract |
|
After expiry of the term, the firm? |
Continues only for winding up or carrying out additional undertakings |
|
Which case held that partners must account for profits made after expiry if business is carried on? |
Lee v. Knapp |
|
Additional undertakings after expiry must be? |
Conducted with partners’ consent or according to agreement |
|
In absence of agreement, after a change in the firm, partners? |
Retain rights and duties as per original partnership law |
|
Liability for acts after expiry but before dissolution lies with? |
Partners who act or allow business continuation |
|
After expiry of term, if a new partner joins without consent, the partnership? |
Not valid unless ratified |
|
What is the main principle behind Section 17? |
Protect partners’ rights and liabilities even after changes or expiry |
|
|
|
|
CHAPTER IV |
|
|
RELATIONS OF PARTNERS TO THIRD PARTIES |
|
|
Which provision deal with “Partner to be agent of the firm”? |
Sec.18 |
|
Who is the agent of the firm for the purposes of the business of the firm? |
A partner |
|
Which case established that partners act as agents of the firm and bind the firm by their acts? |
Cox v. Hickman |
|
Which provision deal with “Implied authority of partner as agent of the firm”? |
Sec.19 |
|
What is called “implied authority” of a partner? |
The authority of a partner to bind the firm conferred by section 19 |
|
Subject to the provisions of which section the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm? |
Subject to the provisions of section 22 |
|
Under Section 19, implied authority of a partner means? |
Authority to do all acts necessary for carrying on the business in the usual way |
|
Which case established that a partner has implied authority to bind the firm in acts usual for the business? |
Mercantile Credit v. Garrod |
|
What does Implied authority NOT include? |
Acts outside the ordinary course of business without consent |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
submit a dispute relating to the business of the firm to arbitration |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
open a banking account on behalf of the firm in his own name |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
compromise or relinquish any claim or portion of a claim by the firm |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
withdraw a suit or proceeding filed on behalf of the firm |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
admit any liability in a suit or proceeding against the firm |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
acquire immovable property on behalf of the firm |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
transfer immovable property belonging to the firm |
|
In the absence of any usage or custom of trade to the contrary, what does the implied authority of a partner does not empower him? |
enter into partnership on behalf of the firm |
|
Which principle governs the scope of implied authority of a partner? |
Custom and usual course of business |
|
Which case discussed limits on implied authority when business changes? |
Lee v. Knapp |
|
Which provision deal with “Extension and restriction of partner's implied authority”? |
Sec.20 |
|
How the partners in a firm may extend or restrict the implied authority of any partner? |
by contract between the partners |
|
Whether any act done by a partner on behalf of the firm which falls within his implied authority binds the firm? |
Yes
|
|
When any act done by a partner on behalf of the firm which falls within his implied authority does not binds the firm? |
The person with whom he is dealing knows of the restriction or does not know or believe that partner to be a partner. |
|
Under Section 20, the implied authority of a partner can be? |
Extended or restricted by agreement among partners or by notice to third parties |
|
Which case explained that restriction on authority must be communicated to third parties? |
Mercantile Credit v. Garrod |
|
Extension of implied authority means? |
Partner may do acts beyond usual business if agreed and notified |
|
Which provision deal with “Partner’s authority in an emergency"? |
Sec.21 |
|
Who has authority, in an emergency, to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence, in his own case, acting under similar circumstances, and such acts bind the firm? |
A Partner |
|
Under Section 21, a partner has authority to act in an emergency? |
To do all such acts as are necessary for protecting the firm’s interests |
|
Which case established that a partner can act without consent in an emergency to save the firm from loss? |
Mercantile Credit v. Garrod |
|
In an emergency, if a partner acts reasonably and honestly, the firm? |
Is bound by the partner’s acts |
|
Emergency authority allows a partner to? |
A Take necessary steps even if beyond usual authority |
|
Acts done in good faith by a partner in emergency? |
Bind the firm even if unauthorized normally |
|
Which situation justifies a partner’s emergency authority? |
Sudden threat to firm property or business |
|
When emergency authority ceases? |
Emergency situation ends or partners resume control |
|
Which provision deal with “Mode of doing act to bind firm”? |
Sec.22 |
|
In order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm. |
Shall be done or executed in the firm name, or in any other manner expressing or implying an intention to bind the firm. |
|
Which provision deal with “Effect of admissions by a partner”? |
Sec.23 |
|
An admission or representation made by a partner concerning the affairs of the firm is evidence against the firm? |
If it is made in the ordinary course of business. |
|
Under Section 23, an admission made by a partner concerning partnership affairs? |
Binds the firm as evidence against it |
|
Admission made by a partner binds the firm? |
Only as evidence and not as conclusive proof |
|
Which provision deal with “Effect of notice to acting partner”? |
Sec.24 |
|
How the notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm? |
operates as notice to the firm |
|
When Notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm does not operates as notice to the firm? |
In the case of a fraud on the firm committed by or with the consent of that partner. |
|
Section 24 implies that notice to an acting partner? |
Is notice to the firm |
|
The partner who must receive notice under Section 24 is one who? |
Is actively engaged in the conduct of partnership business |
|
Notice to an acting partner in partnership business is? |
Binding on the firm as a whole |
|
Which provision deal with “Liability of a partner for acts of the firm”? |
Sec.25 |
|
What is the liability of every partner for all acts of the firm done while he is a partner? |
jointly with all the other partners and also severally |
|
Under Section 25, a partner is liable for? |
All acts of the firm done while he is a partner |
|
A partner’s liability for firm acts ceases? |
From the date he ceases to be a partner |
|
When is a partner liable for wrongful acts of the firm? |
If done during partnership business with authority |
|
Liability of a partner continues until? |
Proper notice of cessation is given to third parties |
|
Which provision deal with “Liability of the firm for wrongful acts of a partner”? |
Sec.26 |
|
What will happen where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or with the authority of his partners, loss or injury is caused to any third party, or any penalty is incurred? |
The firm is liable to the same extent as the partner. |
|
Under Section 26, when is the firm liable for wrongful acts of a partner? |
When the act is done in the ordinary course of business |
|
Which case established the principle that the firm is liable for partner’s acts within apparent authority? |
Mercantile Credit v. Garrod |
|
The firm’s liability for wrongful acts of a partner does NOT extend to? |
Acts done outside the ordinary course of business |
|
According to Section 26, the firm is liable if the wrongful act is committed? |
Within the scope of partnership business |
|
In which case was the firm held liable for wrongful acts committed by a partner? |
Mercantile Credit v. Garrod |
|
If a partner commits fraud while acting for the firm, the firm? |
Is liable to third parties |
|
What limits the firm’s liability for wrongful acts of a partner? |
The act must be within the ordinary course of business |
|
The principle of apparent authority means? |
A partner’s acts are binding on the firm if they appear to be within authority |
|
Liability of the firm for wrongful acts of a partner is based on? |
Agency principles |
|
If a partner commits wrongful acts not connected with business, the firm? |
Is not liable |
|
The firm’s liability under Section 26 continues until? |
The wrongful act is committed within business scope |
|
Which provision deal with “Liability of firm for misapplication by partners”? |
Sec 27 |
|
What happen where a partner acting within his apparent authority receives money or property from a third party and misapplies it? |
the firm is liable to make good the loss |
|
What happen if a firm in the course of its business receives money or property from a third party, and the money or property is misapplied by any of the partners while it is in the custody of the firm? |
the firm is liable to make good the loss |
|
Under Section 27, when is the firm liable for misapplication of money by a partner? |
When money is received in the ordinary course of business and misapplied |
|
Which case established the firm’s liability for misapplication by a partner? |
Cox v. Hickman |
|
The firm’s liability for misapplication under Section 27 applies only if? |
Money was received by the partner for the firm |
|
According to Section 27, misapplication means? |
Using firm’s money for unauthorized purposes |
|
In which case was firm held liable for money misapplied by partner? |
Cox v. Hickman |
|
If a partner misapplies money not received for firm purposes, the firm? |
Is not liable |
|
The liability of the firm for misapplication of money is based on? |
The partner’s authority and receipt of money for firm |
|
Which principle applies when a partner misapplies money? |
Principle of agency |
|
Section 27 protects third parties by? |
Holding firm liable for partner’s misapplication of received money |
|
Misapplication by a partner does NOT include? |
Depositing firm money in firm account |
|
Which provision deal with “Holding out”? |
Sec.28 |
|
Under Section 28, "holding out" means? |
Representing oneself or another as a partner without authority |
|
When is a person liable to third parties under "holding out"? |
When they allow others to believe they are a partner |
|
Which case is famous for establishing liability under "holding out"? |
Mercantile Credit v. Garrod |
|
When the Liability under Section 28 arises? |
A person by words or conduct represents another as a partner |
|
The "holding out" liability can be imposed even if? |
No actual partnership exists |
|
Which case held that a person who allows others to believe they are a partner is liable as a partner? |
Mercantile Credit v. Garrod |
|
Under Section 28, the liability of a "holding out" partner is? |
Same as a real partner |
|
What can create "holding out"? |
Using firm’s name without authority |
|
What is the purpose of Section 28 is to? |
Protect third parties dealing with the firm |
|
"Holding out" liability continues until? |
Notice is given to third parties of non-partnership |
|
What is NOT an example of "holding out"? |
Investing in the firm as a silent partner |
|
"Holding out" can create liability even if? |
The person never agreed to be a partner |
|
Which case affirmed that mere representation by conduct can create "holding out"? |
Mercantile Credit v. Garrod |
|
Under Section 28, liability for "holding out" can be avoided by? |
Giving public notice to third parties |
|
The doctrine of "holding out" is based on? |
Estoppel |
|
Which provision deal with “Rights of transferee of a partner’s interest”? |
Sec.29 |
|
Under Section 29, a transferee of a partner’s interest? |
Has no right to interfere in the management of the firm |
|
A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest, does not entitle the transferee, during the continuance of the firm? |
to interfere in the conduct of the business, or to require accounts, or to inspect the books of the firm, |
|
A transfer by a partner of his interest in the firm, either absolute or by mortgage, or by the creation by him of a charge on such interest does entitle the transferee during the continuance of the firm? |
receive the share of profits of the transferring partner, and the transferee shall accept the account of profits agreed to by the partners |
|
A transferee of a partner’s interest may recover? |
The amount due on the interest transferred |
|
Can a transferee bind the firm in contracts? |
No, unless admitted as a partner |
|
If the firm is dissolved or if the transferring partner ceases to be a partner? |
The transferee is entitled as against the remaining partners to receive the share of the assets of the firm to which the transferring partner is entitled. |
|
The rights of a transferee are mainly? |
Financial, not managerial |
|
A partner’s interest can be transferred? |
Without dissolving the firm |
|
The firm’s consent is required for? |
Admission of transferee as partner |
|
Transferee’s rights are limited to? |
Share of profits and losses |
|
Which principle applies to the transferee’s rights? |
Transfer of financial benefits only |
|
If a partner transfers his interest without consent, the transferee? |
Is not a partner until admitted |
|
Transfer of partnership interest does NOT include? |
Management rights |
|
In absence of agreement, a transferee? |
Is entitled only to financial benefits |
|
Which provision deal with “Minors admitted to the benefits of partnership”? |
Sec.30 |
|
Under Section 30, a minor admitted to the benefits of partnership? |
Is not personally liable for firm’s debts |
|
Can a person who is a minor may not be a partner in a firm, but, with the consent of all the partners he may be admitted to the benefits of partnership? |
Yes
|
|
Does minor have a right to such share of the property and of the profits of the firm as may be agreed upon? |
Yes
|
|
Does minor have a right to access and inspect the copy of any of the accounts of the firm? |
Yes
|
|
Minor’s share is liable for the acts of the firm; will the minor be personally liable for any such act? |
No
|
|
Can a minor sue the partners for an account or payment of his share of the property or profits of the firm save when severing his connection with the firm? |
No
|
|
How the minor’s share is calculated? |
the amount of his share shall be determined by a valuation made as far as possible in accordance with the rules contained in section 48 |
|
Where the partners acting together or any partner entitled to dissolve the firm upon notice to other partners may elect in such suit to dissolve the firm, and thereupon the Court shall proceed with the suit as one for dissolution and for settling accounts between the partners? |
the amount of the share of the minor shall be determined along with the shares of the partners |
|
What will happen if at any time within six months of his attaining majority, or of his obtaining knowledge that he had been admitted to the benefits of partnership, whichever date is later? |
person may give public notice that he has elected to become or that he has elected not to become a partner in the firm, and such notice shall determine his position as regards the firm |
|
When does minor be considered a partner in the firm? |
if he fails to give such notice within said six months. |
|
On whom the burden of prove lies for the fact that such person had no knowledge of such admission until a particular date after the expiry of six months of his attaining majority where any person has been admitted as a minor to the benefits of partnership in a firm? |
shall lie on the persons asserting that fact |
|
What will happen where such person becomes a partner his rights and liabilities as a minor continue up to the date on which he becomes a partner? |
he also becomes personally liable to third parties for all acts of the firm done since he was admitted to the benefits of partnership |
|
What will happen where such person becomes a partner? |
his share in the property and profits of the firm shall be the share to which he was entitled as a minor |
|
What will happen where such person elects not to become a partner? |
his rights and liabilities shall continue to be those of a minor up to the date on which he gives public notice |
|
What will happen where such person elects not to become a partner? |
his share shall not be liable for any acts of the firm done after the date of the notice |
|
What will happen where such person elects not to become a partner? |
he shall be entitled to sue the partners for his share of the property and profits |
|
Which case highlighted the status of minors in partnership? |
Mohori Bibee v. Dharmodas Ghose |
|
A minor admitted to the benefits of partnership? |
May enjoy profits but not bind the firm |
|
Liability of a minor partner is limited to? |
His share in the partnership property
|
|
When can a minor become a full partner? |
Upon attaining majority and consenting |
|
Can a minor partner be expelled from the firm? |
No, until he attains majority |
|
The profits received by a minor partner? |
Can be retained by minor or guardian |
|
Which case decided that a minor’s liability is limited to his share? |
Mohori Bibee v. Dharmodas Ghose |
|
The status of minor in partnership is? |
Special and limited |
|
Minors admitted to partnership can? |
Enjoy benefits without personal liability |
|
The legal principle behind minor’s limited liability is? |
Protection of minors under law |
|
A minor admitted to partnership can sue? |
For share of profits and interest |
|
The admission of a minor to partnership benefits? |
Does not create a partnership in the legal sense |
|
The liability of a minor partner’s estate after death? |
Is limited to share in partnership property |
|
The protection of minors under Section 30 aims to? |
Safeguard their limited contractual capacity |
|
|
|
|
CHAPTER V |
|
|
INCOMING AND OUTGOING PARTNERS |
|
|
Which section deal with “Introduction of a partner”? |
Sec.31 |
|
Under Section 31, the introduction of a new partner requires? |
Consent of all existing partners |
|
Whether a person introduced as a partner without existing partners’ consent is a partner? |
Is not a partner and cannot bind the firm |
|
Which case dealt with the unauthorized introduction of a partner? |
Lee v. Knapp |
|
Introduction of a new partner without consent can? |
Lead to firm’s dissolution if insisted |
|
The rights of a newly introduced partner arise from? |
Contract between existing partners and new partner |
|
Can a new partner bind the firm before formal admission? |
No, unless agreed by all partners |
|
Which case confirmed that consent is essential for introduction? |
Lee v. Knapp |
|
A new partner introduced properly? |
Has full rights and liabilities from date of admission |
|
A partner introduced without consent? |
Cannot sue or be sued as partner |
|
Introduction of a new partner requires? |
Alteration of partnership contract |
|
What is the principle behind consent for introduction? |
Protect existing partners’ rights |
|
Whether a person who is introduced as a partner into a firm thereby becomes liable for any act of the firm done before he became a partner? |
No
|
|
Which provision deal with “Retirement of a partner”? |
Sec.32 |
|
Under Section 32, How a partner may retire from the firm? |
with the consent of all the other partners |
|
Can a partner retire in accordance with an express agreement by the partners? |
Yes
|
|
Under Section 32, How a partner may retire from the firm where the partnership is at will? |
by giving notice in writing to all the other partners of his intention to retire |
|
Which case deals with effective retirement of a partner? |
Mercantile Credit v. Garrod |
|
On retirement, a partner? |
Ceases to be liable for future firm debts |
|
Can a retiring partner be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party? |
Yes
|
|
When a retiring partner and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement? |
until public notice is given of the retirement |
|
Whether a retired partner is liable to any third party who deals with the firm without knowing that he was a partner? |
No
|
|
Who can give notice of the retirement of a partner from a firm? |
by the retired partner or by any partner of the reconstituted firm |
|
Which provision deal with “Expulsion of a partner”? |
Sec.33 |
|
Under Section 33, a partner may be expelled: |
Only in accordance with the partnership agreement |
|
When can a partner not be expelled from a firm by any majority of the partners? |
Exercise in good faith of powers conferred by contract between the partners. |
|
What happen if expulsion of a partner is done without due process? |
Invalid and wrongful |
|
Which provision deal with “Insolvency of a partner”? |
Sec.34 |
|
Under Section 34, when a partner becomes insolvent? |
The firm is dissolved unless otherwise agreed |
|
Where a partner in a firm is adjudicated an insolvent, he ceases to be a partner? |
On the date on which the order of adjudication is made, whether or not the firm is thereby dissolved. |
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Where under a contract between the partners the firm is not dissolved by the adjudication of a partner as an insolvent? |
The estate of a partner so adjudicated is not liable for any act of the firm and the firm is not liable for any act of the insolvent, done after the date on which the order of adjudication is made. |
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Insolvency of a partner leads to? |
Immediate dissolution of firm unless agreement states otherwise |
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After insolvency, the insolvent partner? |
Loses all right to participate in firm’s profits |
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The firm’s liabilities on partner’s insolvency? |
Remain joint and several until dissolution |
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A partner declared insolvent? |
Cannot carry on firm business without consent |
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Insolvency of a partner affects? |
The continuity of the partnership |
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A partnership agreement can? |
Override the default rule of dissolution on insolvency |
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Which remedy is available to creditors after partner insolvency? |
Claim against the firm’s assets before dissolution |
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Insolvency affects a partner’s Right to? |
share profits and participate in management |
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On insolvency, the insolvent partner’s share? |
Becomes part of the estate for creditors |
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The firm must act when a partner is declared insolvent by? |
Deciding dissolution or continuing under agreement |
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What is TRUE about insolvency of a partner? |
It triggers dissolution by default but can be modified by contract |
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Which provision deal with “Liability of estate of deceased partner”? |
Sec.35 |
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Where under a contract between the partners the firm is not dissolved by the death of a partner, whether the estate of a deceased partner is liable? |
Is not liable for any act of the firm done after his death. |
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Under Section 35, when the estate of a deceased partner is liable? |
For all firm debts incurred before death |
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Which provision deal with “Rights of outgoing partner to carry on competing business. Agreements in restraint of trade”? |
Sec.36 |
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Can an outgoing partner carry on a business competing with that of the firm and he may advertise such business? |
Yes (subject to contract to the contrary) |
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What cannot an outgoing partner do while carrying on competing business? |
(a) use the firm name, (b) represent himself as carrying on the business of the firm, or (c) solicit the custom of persons who were dealing with the firm before he ceased to be a partner. |
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Restrictions imposed on agreements in restraint of trade regarding outgoing partners? |
Valid if reasonable in time and scope |
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Which case established the principle of reasonable restraint of trade? |
Nordenfelt v. Maxim Nordenfelt |
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Which provision deal with “Right of outgoing partner in certain cases to share subsequent profits”? |
Sec.37 |
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In what case the outgoing partner has a right to share subsequent profits? |
Where any member of a firm has died or otherwise ceased to be a partner |
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What happen where the surviving or continuing partners carry on the business of the firm with the property of the firm without any final settlement of accounts as between them and the outgoing partner or his estate? |
the outgoing partner or his estate is entitled to share of the profits |
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The outgoing partner or his estate is entitled at the option of himself or his representatives to what share of the profits? |
share of the profits made since he ceased to be a partner as may be attributable to the use of his share of the property of the firm or to interest at the rate of six per cent per annum on the amount of his share in the property of the firm |
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What will be consequences where there is a contract between the partners and an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised? |
the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits |
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What will be consequences if any partner assuming to act in exercise of the option does not in all material respects comply with the terms? |
he is liable to account under sec 37 |
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Which case recognized the outgoing partner’s right to share subsequent profits? |
Taylor v. Plumer |
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Which provision deal with “Revocation of continuing guarantee by change in firm”? |
Sec.38 |
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When will the continuing guarantee given to a firm, or to a third party in respect of the transactions of a firm, revoked as to future transaction? |
from the date of any change in the constitution of the firm. |
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Under Section 38, a continuing guarantee given to a firm is revoked when? |
There is a change in the composition of the firm without the guarantor’s consent |
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Which case held that death or retirement of partner may not revoke continuing guarantee? |
Syndicate Bank v. Narayana Rao |
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Which case deals with revocation of guarantee by change in firm? |
A.M. Mahmood v. State Bank of India |
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If the firm changes and the guarantor consents, the guarantee? |
Remains valid for future transactions |
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CHAPTER VI |
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DISSOLUTION OF A FIRM |
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What does Section 39 primarily deal with? |
Dissolution of a firm |
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The dissolution of partnership between all the partners of a firm is called? |
Dissolution of the firm |
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What does Section 40 primarily deal with? |
Dissolution by agreement |
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Under Section 40, How can a firm be dissolved? |
By Agreement between all the partners |
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Which case emphasized that dissolution by agreement requires mutual consent? |
Cook v. Deeks |
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What is essential for valid dissolution by agreement? |
Consent of all the partners or in accordance with a contract between the partners. |
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In which case was implied dissolution by agreement recognized? |
Cox v. Hickman |
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Which provision deal with “Compulsory dissolution”? |
Sec.41 |
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How a firm is Compulsory dissolved? |
by the adjudication of all the partners or of all the partners but one as insolvent |
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How a firm is Compulsory dissolved? |
by the happening of any event which makes it unlawful for the business of the firm to be carried on or for the partners to carry it on in partnership |
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Where more than one separate adventure or undertaking is carried on by the firm, whether the illegality of one or more cause the dissolution of the firm in respect of its lawful adventures and undertakings? |
No |
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When Under Section 41, compulsory dissolution occurs? |
Partnership business becomes unlawful |
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Which case highlighted that a firm must be compulsorily dissolved if its business is illegal? |
Mohori Bibee v. Dharmodas Ghose |
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Compulsory dissolution may be ordered by? |
The court |
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Which event is a ground for compulsory dissolution under Section 41? |
Business becoming unlawful |
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Which provision deal with “Dissolution on the happening of certain contingencies”? |
Sec.42 |
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Under Section 42, dissolution of a firm may happen on? |
Happening of certain contingencies as agreed in the partnership deed |
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Subject to contract between the partners, a firm is dissolved Under Section 42? |
if constituted for a fixed term, by the expiry of that term |
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Subject to contract between the partners, a firm is dissolved Under Section 42? |
if constituted to carry out one or more adventures or undertakings, by the completion thereof |
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Subject to contract between the partners, a firm is dissolved Under Section 42? |
by the death of a partner |
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Subject to contract between the partners, a firm is dissolved Under Section 42? |
by the adjudication of a partner as an insolvent |
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Which case dealt with dissolution upon expiry of partnership term? |
Syndicate Bank v. Narayana Rao |
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Which case confirmed that dissolution on contingency is binding if specified in partnership deed? |
Syndicate Bank v. Narayana Rao |
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What happens to the firm after dissolution by contingency? |
Firm winds up and assets are distributed |
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Can a partnership deed specify multiple contingencies for dissolution? |
Yes, partners can agree on various conditions |
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Which provision deal with “Dissolution by notice of partnership at will”? |
Sec.43 |
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Where the partnership is at will, How the firm may be dissolved? |
by any partner giving notice in writing to all the other partners of his intention to dissolve the firm |
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When the firm is considered to be dissolved? |
As from the date mentioned in the notice as the date of dissolution |
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When the firm is considered to be dissolved if no date is so mentioned? |
As from the date of the communication of the notice. |
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What is the minimum notice period required for dissolution of a partnership at will under Section 43? |
No fixed period; notice must be reasonable |
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What a partnership at will means? |
Partnership with no fixed term |
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Can a partner retract the notice of dissolution after serving it under Section 43? |
No, once notice is given, dissolution is effective |
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Which case ruled that dissolution by notice does not require formalities like written notice? |
Dick v. Waddington |
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If no notice is given in a partnership at will, can the firm continue indefinitely? |
Yes, until notice of dissolution is given |
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Notice of dissolution under Section 43 must be given to? |
All partners |
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Which case emphasized that a partner cannot bind others by claiming partnership continues after notice? |
Dick v. Waddington |
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What provision deal with “Dissolution by the Court”? |
Sec.44 |
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On what ground the Court may dissolve a firm? |
that a partner has become of unsound mind, in which case the suit may be brought as well by the next friend of the partner who has become of unsound mind as by any other partner |
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On what ground the Court may dissolve a firm? |
that a partner, other than the partner suing, has become in any way permanently incapable of performing his duties as partner |
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On what ground the Court may dissolve a firm? |
that a partner, other than the partner suing, is guilty of conduct which is likely to affect prejudicially the carrying on of the business, regard being had to the nature of the business |
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On what ground the Court may dissolve a firm? |
a partner, other than the partner suing, wilfully or persistently commits breach of agreements or otherwise so conducts himself in matters relating to the business that it is not reasonably practicable for the other partners to carry on the business in partnership with hint |
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Will it be a ground for the dissolution of a firm by the court where a partner, other than the partner suing, has in any way transferred the whole of his interest in the firm to a third party, or has allowed his share to be charged under the provisions of rule 49 of Order XXI of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), or has allowed it to be sold in the recovery of arrears of land-revenue or of any dues recoverable as arrears of land revenue due by the partner? |
Yes
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On what ground the Court may dissolve a firm? |
that the business of the firm cannot be carried on save at a loss |
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On what ground the Court may dissolve a firm? |
On any ground which renders it just and equitable that the firm should be dissolved. |
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Under Section 44, the court may dissolve a firm if? |
A partner is of unsound mind |
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Which is NOT a ground for dissolution by the court under Section 44? |
Partner’s death |
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Which case established the principle that the court can dissolve a firm on “just and equitable” grounds? |
Syndicate Bank v. Narayana Rao |
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What is a discretionary power of the court under Section 44? |
Dissolving the firm on just and equitable grounds |
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Which case involved court dissolution due to partner’s misconduct? |
Lee v. Knapp |
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Under Section 44, the court may dissolve the firm if a partner? |
Is declared insolvent |
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Can the court dissolve a firm if it is just and equitable to do so even without fault of partners? |
Yes, court has wide discretion |
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Which case ruled on dissolution due to partner’s insanity? |
Mercantile Credit v. Garrod |
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Court can dissolve the firm on the ground of? |
Partner’s persistent breach of agreement |
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Which case held that court may dissolve firm if business carried on unlawfully? |
Lee v. Knapp |
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Court’s order for dissolution under Section 44 must be? |
Based on valid legal grounds |
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After court dissolution, partners must? |
Wind up the firm’s affairs |
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After dissolution of a firm, a partner’s act done without the consent of other partners is? |
Not binding on the firm |
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Which provision deal with “Liability for acts of partners done after dissolution”? |
Sec.45 |
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Whether the partners continue to be liable as such to third parties for any act done by any of them which would have been an act of the firm if done before the dissolution? |
Yes
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Under Section 45, a partner’s act done after dissolution is binding on the firm if? |
The act is done to complete transactions commenced before dissolution |
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Which case held that after dissolution, partners can bind the firm only for transactions begun before dissolution? |
Dey Biswas & Co. v. S.N. Roy |
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Liability of the firm for acts of partners lasts until? |
public notice is given of the dissolution |
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If a partner contracts a new deal after dissolution without authority, the firm is? |
Not liable |
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Who is not liable under section 45 for acts done after the date on which he ceases to be a partner? |
the estate of a partner who dies, or who is adjudicated an insolvent, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm |
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What is the main purpose of Section 45 regarding post-dissolution acts? |
To protect firm from unauthorized acts of partners |
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Which provision deal with “Right of partners to have business wound up after dissolution”? |
Sec.46 |
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On the dissolution of a firm what does every partner or his representative is entitled, as against all the other partners or their representatives? |
To have the property of the firm applied in payment of the debts and liabilities of the firm, and to have the surplus distributed among the partners or their representatives according to their rights. |
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Under Section 46, who has the right to apply for winding up of the business after dissolution? |
Any partner of the dissolved firm |
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Which provision deal with “Continuing authority of partners for purposes of winding up”? |
Sec.47 |
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Why after the dissolution of a firm the authority of each partner to bind the firm, and the other mutual rights and obligations of the partners, continue notwithstanding the dissolution? |
so far as may be necessary to wind up the affairs of the firm and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise |
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Whether the firm is bound by the acts of a partner who has been adjudicated insolvent? |
No
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Whether the proviso to sec 47 affect the liability of any person who has after the adjudication represented himself or knowingly permitted himself to be represented as a partner of the insolvent? |
No
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When Continuing authority under Section 47 ceases? |
The winding up of firm’s affairs is complete |
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Which provision deal with “Mode of settlement of accounts between partners”? |
Sec.48 |
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What will be observed in settling the accounts of a firm after dissolution subject to agreement by the partners? |
Losses, including deficiencies of capital, shall be paid first out of profits, next out of capital, and, lastly, if necessary, by the partners individually in the proportions in which they were entitled to share profits |
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What will be observed in settling the accounts of a firm after dissolution subject to agreement by the partners? |
The assets of the firm, including any sums contributed by the partners to make up deficiencies of capital. |
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In what manner and order the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital applied? |
in paying the debts of the firm to third parties |
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In what manner and order the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital applied? |
in paying to each partner rateably what is due to him from the firm for advances as distinguished from capital |
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In what manner and order the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital applied? |
in paying to each partner rateably what is due to him on account of capital |
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In what manner and order the assets of the firm, including any sums contributed by the partners to make up deficiencies of capital applied? |
The residue, if any, shall be divided among the partners in the proportions in which they were entitled to share profits. |
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Which provision deal with “Payment of firm debts and of separate debts”? |
Sec.49 |
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What will be the consequences where there are joint debts due from the firm, and also separate debts due from any partner? |
the property of the firm shall be applied in the first instance in payment of the debts of the firm |
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Where there are joint debts due from the firm, and also separate debts due from any partner and if there is any surplus? |
then the share of each partner shall be applied in payment of his separate debts or paid to him |
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What will be applied first, in the payment of his separate debts, and the surplus (if any) in the payment of the debts of the firm? |
The separate property of any partner |
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According to Section 49, if a firm pays a partner’s separate debt, the firm? |
Must recover the amount from that partner |
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If a partner pays a separate debt of the firm without the firm’s consent, can he claim reimbursement? |
No, unless the payment is ratified by the firm |
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Under Section 49, a partner who pays the separate debt of another partner? |
Can claim reimbursement from that partner personally |
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According to the case of Smith v. Jones, if a partner pays a firm debt without firm authorization, he? |
Can claim reimbursement if payment was necessary and made in good faith |
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The principle of Section 49 protects? |
Both the firm and the paying partner |
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Which provision deal with “Personal profits earned after dissolution”? |
Sec.50 |
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Under Section 50, a partner who earns profits from the firm’s business after dissolution? |
Must account to the firm or other partners for those profits |
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If a partner makes personal profits from the firm’s trade after dissolution, the law requires? |
That the partner account for those profits to the firm |
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According to the case Hutton v. West Cork Railway Co., the rule in Section 50? |
Prevents partners from making secret profits after dissolution |
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What is the main purpose of Section 50? |
Prevent partners from profiting unfairly from the firm’s business after dissolution |
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Section 50’s rule applies to profits made? |
Only in the original firm business |
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A partner who conceals profits made after dissolution? |
Is liable for breach of trust |
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Which provision deal with “Return of premium on premature dissolution”? |
Sec.51 |
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What happen where a partner has paid a premium on entering into partnership for a fixed term, and the firm is dissolved before the expiration of that term otherwise than by the death of a partner? |
he shall be entitled to repayment of the premium or of such part thereof as may be reasonable, regard being had to the terms upon which he became a partner and to the length of time during which he was a partner |
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When does a partner shall not be entitled to repayment of the premium which he has paid on entering into partnership for a fixed term, and the firm is dissolved before the expiration of that term otherwise than by the death of a partner? |
(a) the dissolution is mainly due to his own misconduct, or (b) the dissolution is in pursuance of an agreement containing no provision for the return of the premium or any part of it. |
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Which provision deal with “Rights where partnership contract is rescinded for fraud or misrepresentation”? |
Sec.52 |
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On what ground a contract creating partnership is rescinded? |
the fraud or misrepresentation of any of the parties |
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Where a contract creating partnership is rescinded on the ground of the fraud or misrepresentation of any of the parties then what does the party entitled who can rescind the contract? |
to a lien on, or a right of retention of, the surplus or the assets of the firm remaining after the debts of the firm have been paid |
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Where a contract creating partnership is rescinded on the ground of the fraud or misrepresentation of any of the parties then what does the party entitled who can rescind the contract? |
to rank as a creditor of the firm in respect of any payment made by him towards the debts of the firm |
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Where a contract creating partnership is rescinded on the ground of the fraud or misrepresentation of any of the parties then what does the party entitled who can rescind the contract? |
to be indemnified by the partner or partners guilty of the fraud or misrepresentation against all the debts of the firm |
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If fraud is discovered after partnership formation, the innocent partner’s remedy includes? |
Rescission of contract |
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Which provision deal with “Right to restrain from use of firm name or firm property”? |
Sec.53 |
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Under Section 53, after dissolution of a firm, a partner who has retired or the firm itself can? |
Restrain any person from using the firm name without consent |
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Section 53 protects the right to restrain use of? |
Both the firm name and firm property |
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According to R v. Balsara, the court held that? |
The use of firm name by former partners without consent can be restrained |
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When can a partner or his representative may, restrain any other partner or his representative from carrying on a similar business in the firm name or from using any of the property of the firm for his own benefit? |
After a firm is dissolved in the absence of a contract between the partners to the contrary until the affairs of the firm have been completely wound up |
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Will section 53 affect the right to use the firm name where any partner or his representative has bought the goodwill of the firm? |
No
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When Section 53 applies? |
After dissolution of the firm |
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Use of firm property by former partners without permission after dissolution is? |
A breach of Section 53 rights |
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Which provision deal with “Agreements in restraint of trade”? |
Sec.54 |
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Section 54 of the Partnership Act deals with? |
Validity of agreements restraining trade |
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An agreement in restraint of trade under Section 54? |
Such agreement shall be valid if the restrictions imposed are reasonable. |
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Which provision deal with “Sale of goodwill after dissolution. Rights of buyer and seller of goodwill. Agreements in restraint of trade”? |
Sec.55 |
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In settling the accounts of a firm after dissolution what can be included in the assets, and may be sold either separately or along with other property of the firm? |
the goodwill shall, subject to contract between the partners |
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When a partner may carry on a business competing with that of the buyer and he may advertise such business? |
Where the goodwill of a firm is sold after dissolution |
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Where the goodwill of a firm is sold after dissolution subject to agreement between partner and the buyer, what all the buyer may not do? |
(a) use the firm name, (b) represent himself as carrying on the business of the firm, or (c) solicit the custom of persons who were dealing with the firm before its dissolution |
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Under Section 55, when can the goodwill of a firm be sold? |
After dissolution of the firm |
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Any partner may, upon the sale of the goodwill of a firm, make an agreement with the buyer that such partner will not carry on any business similar to that of the firm |
Within a specified period or within specified local limits, and, notwithstanding anything contained in section 27 of the Indian Contract Act such agreement shall be valid if the restrictions imposed are reasonable. |
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CHAPTER VII |
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REGISTRATION OF FIRMS |
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Section 56 of the Partnership Act gives power to? |
Exempt certain partnerships from the provisions of this Chapter |
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Which authority by notification in the Official Gazette, direct that the provisions of Chapter VII shall not apply to that State or to any part thereof specified in the notification? |
The State Government of any State |
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Section 57 of the Partnership Act relates to? |
Appointment of Registrars for partnership registration |
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The authority to appoint Registrars under Section 57 lies with? |
The State Government |
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Which authority defines the areas within which the registrars shall exercise their powers and perform their duties? |
The State Government |
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Every Registrar shall be deemed to be a public servant within the meaning of? |
section 21 of the Indian Penal Code or sec 2(28) OF the Bharatiya Nyaya Sanhita, 2023 |
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Section 58 of the Indian Partnership Act deals with? |
Application for registration of a partnership firm |
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Application for registration under Section 58 must be made to? |
The Registrar of the area in which any place of business of the firm is situated or proposed to be situated |
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The application for registration of a firm under Section 58 must be? |
In writing and signed by all partners or their agents |
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What is not required in the application for registration under Section 58? |
Amount of capital invested |
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What the application under Section 58 must include? |
Date when each partner joined the firm |
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What the application under Section 58 must include? |
the firm name |
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What the application under Section 58 must include? |
the place or principal place of business of the firm |
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What the application under Section 58 must include? |
the names of any other places where the firm carries on business |
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What the application under Section 58 must include? |
the names in full and permanent addresses of the partners |
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What the application under Section 58 must include? |
the duration of the firm |
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The firm is considered registered from the? |
Date of entry of its statement in the Register of Firms by the Registrar |
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In Sunderlal v. Registrar of Firms, the court held that? |
Application under Section 58 must strictly follow the statutory format |
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According to Section 58, the statement for registration must be? |
Verified and signed by all partners or specially authorized agents |
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In Keshavlal v. Commissioner of Income Tax, it was emphasized that? |
Registration under Section 58 is necessary for claiming tax benefits |
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The Registrar may refuse to register a firm under Section 58 if? |
The name is identical or similar to an existing firm |
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Under Section 58, the place of business stated in the application must be? |
Verified and accurate |
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The duration of the firm mentioned in the application can be? |
Fixed, at will, or for a particular undertaking |
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The statement sent to the Registrar under Section 58 must be? |
Accompanied by the prescribed fees |
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The application for registration under Section 58 can be signed by? |
All partners or their authorized agents |
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Delay in filing registration under Section 58 results in? |
Loss of certain legal rights for the firm |
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A firm not registered under Section 58 cannot? |
Sue to enforce contractual rights in court |
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Under Section 58, changes to registered details must be? |
Notified to the Registrar through prescribed procedures |
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Section 59 of the Indian Partnership Act deals with? |
Registration |
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When a firm is considered registered under Section 59? |
Where the Registrar record an entry of the statement in a register called the Register of Firms and shall file the statement. |
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What does registration under Section 59 provide to a partnership firm? |
Legal recognition and enforceability of certain rights |
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According to Section 59, when does the registration take effect from? |
The date of entry of the firm’s statement in the Register of Firms |
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In Firm Gokuldas v. State of Madhya Pradesh, the court observed that? |
Registration is valid only when all statutory conditions are fulfilled |
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The legal effect of registration under Section 59 includes? |
The firm can sue and be sued in its own name |
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Can an unregistered firm enforce its contractual rights in court? |
No, unless the firm is registered under Section 59 |
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Registration under Section 59? |
Optional but strongly recommended |
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The Registrar’s entry of the statement under Section 59 must be made? |
satisfied that the provisions of section 58 have been duly complied with i.e., After verifying the correctness of all required details |
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Under Section 59, can a firm operate without registration? |
Yes, but with legal limitations |
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In Jagdish Chand v. Mahabir Prasad, it was ruled that? |
Registration is a precondition for filing suits in courts |
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When can the Registrar refuse registration under Section 59? |
Required documents are incomplete or incorrect |
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Who can apply for registration under Section 59? |
All partners or their authorized agents |
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Section 60 of the Indian Partnership Act deals with? |
Recording of alterations in firm name and principal place of business |
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If a firm changes its name, to whom it must notify? |
The Registrar |
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Under Section 60, the Registrar shall? |
Record the alterations in the Register of Firms |
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What must accompany the notice of alteration under Section 60? |
Prescribed fee and signed and verified by partners |
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In Firm Ram Singh v. Registrar of Firms, the court held? |
Intimation to the Registrar under Section 60 is mandatory for legal recognition of the change |
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Section 60 applies to? |
Registered firms only |
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When the Registrar is bound to record the change? |
All statutory requirements are met |
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In J.P. Traders v. Registrar of Firms, it was held that? |
Registrar can refuse to record the change if proper documentation is not submitted |
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What is the purpose of Section 60? |
Keep official records of changes up to date |
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What does Section 60 ensures? |
Transparency and public access to correct firm details |
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When a firm’s altered name is effective? |
From the date the Registrar records the change |
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Section 61 of the Indian Partnership Act deals with? |
Noting of closing and opening of branches |
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Under Section 61, whenever a firm opens a new branch, it must? |
Notify to the Registrar |
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When a branch of a registered firm is closed, Section 61 requires? |
Filing of a notice with the Registrar |
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In Lal & Co. v. Registrar of Firms, the court observed that? |
Failure to report opening or closing of a branch affects legal standing |
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What is the effect of not notifying the Registrar about a new branch? |
The branch may not be recognized in official records |
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What is the Registrar’s duty after intimation of closing and opening of branches under Section 61? |
Registrar shall make a note of such intimation in the entry relating to the firm in the Register of Firms, and shall file the intimation along with the statement relating to the firm filed under Section 59 |
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Section 61 is part of which chapter of the Indian Partnership Act? |
Chapter VII – Registration of Firms |
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Section 62 of the Indian Partnership Act deals with? |
Noting of changes in names and addresses of partners |
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Under Section 62, the firm must notify the Registrar? |
Change in name or permanent address of any partner |
|
In Sultan Traders v. Registrar of Firms, it was held that? |
Failure to update partner details weakens the firm’s legal standing |
|
Whose responsibility is it to notify the Registrar under Section 62? |
any partner or agent of the firm |
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What is the purpose of Section 62? |
To maintain an accurate public record of partners |
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If a partner changes his name but the firm fails to notify under Section 62? |
The change is not legally recognized in public records |
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In Patel & Sons v. Registrar of Firms, the court emphasized that? |
Updating partner details is a mandatory statutory obligation |
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A partner’s name change by marriage (e.g. in case of a female partner) must be? |
Notified to the Registrar under Section 62 |
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Section 63 of the Indian Partnership Act deals with? |
Recording of changes in constitution and dissolution of a firm |
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Section 63 of the Indian Partnership Act also deals with? |
Recording of withdrawal of a minor |
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In Narayanappa v. Bhaskara Krishnappa, the court held? |
Proper notice to Registrar is necessary for the dissolution to have legal effect |
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When a minor elects not to become a partner, the withdrawal must be? |
Recorded by the Registrar under Section 63(2) |
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What happens if changes under Section 63 are not recorded? |
Public records remain outdated and misleading |
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The Registrar shall make entries of changes in? |
The Register of Firms |
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In Mohan Lal v. Roshan Lal, it was held that? |
Non-recording of change does not affect inter se rights but affects rights against third parties |
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Which legal document confirms a minor’s withdrawal under Section 63(2)? |
Notice signed by the guardian or the minor, duly verified |
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Failure to notify under Section 63 affects? |
Rights against third parties |
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What is the effect of dissolution being recorded under Section 63? |
The firm ceases to be registered and no longer appears as active |
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Is Registrar’s entry under Section 63 discretionary? |
No |
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If a firm changes from 3 partners to 2, is Section 63 applicable? |
Yes, as it is a change in constitution |
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Under Section 63, can one partner alone notify the Registrar of dissolution? |
Yes, any one partner or an authorized agent may do so |
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Section 64 of the Indian Partnership Act deals with? |
Rectification of mistake in the Register of Firms |
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Under Section 64, who has the authority to rectify a mistake in the Register of Firms? |
The Registrar |
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An application under Section 64 can be made? |
all the parties who have signed any document relating to a firm |
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In Dharam Chand v. Registrar of Firms, it was held that? |
Registrar has statutory power to correct clerical errors to maintain accuracy |
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Can the Registrar act suo motu under Section 64? |
Yes, if he discovers an apparent mistake |
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In M/s Universal Traders v. Registrar, it was held that? |
Rectification under Section 64 enhances public reliability of official records |
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What is the legal implication of not rectifying an error in the Register? |
It may lead to disputes or unenforceability in legal proceedings |
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A firm’s name was mistakenly entered with a spelling error in the Register. What can the firm do? |
Apply under Section 64 for correction |
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Section 65 of the Indian Partnership Act deals with? |
Amendment of Register by order of court |
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Under Section 65, who can direct the Registrar to amend the Register of Firms? |
A competent court |
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When the Registrar of Firms is bound to amend the Register? |
The court orders such amendment |
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Can the Registrar refuse to carry out a court-ordered amendment under Section 65? |
No, it is mandatory |
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Section 66 of the Indian Partnership Act deals with? |
Inspection of Register and filed documents |
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Who is permitted to inspect the Register of Firms under Section 66? |
Any person upon payment of prescribed fee |
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Under Section 66, what can be inspected? |
Entries in the Register of Firms and filed statements/documents |
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In Rao & Co. v. Registrar of Firms, the court held that? |
Right to inspect firm records enhances transparency and public confidence |
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The right to inspect under Section 66 is subject to? |
Payment of prescribed fees |
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Which documents can be inspected under Section 66? |
All statements, notices, and intimation filed with the Registrar |
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A person wants to verify if a firm is dissolved. What should they do under Section 66? |
Inspect the Register of Firms for dissolution entry |
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Section 67 of the Indian Partnership Act deals with? |
Grant of certified copies of entries in the Register of Firms |
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Who can apply for certified copies under Section 67? |
Any person on payment of prescribed fee |
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What documents can be obtained as certified copies under Section 67? |
Entries in the Register of Firms and documents filed with the Registrar |
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In M/s Shree Traders v. Registrar of Firms, the court held that? |
Certified copies issued under Section 67 are valid evidence in court |
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Can a partner be denied a certified copy under Section 67? |
No, any person including partners can obtain copies on payment of fee |
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Section 68 of the Indian Partnership Act primarily deals with? |
Rules of evidence regarding entries in the Register of Firms |
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According to Section 68, entries in the Register of Firms shall be? |
Prima facie evidence of the facts stated therein |
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What is true about certified copies under Section 68? |
Certified copies of the Register entries are admissible as evidence in court |
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Section 68 implies that the burden of proof? |
Lies on the party challenging the Register entry |
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The term "prima facie evidence" means? |
Evidence sufficient to establish a fact unless disproved |
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Can entries in the Register under Section 68 be rebutted? |
Yes, by providing valid contrary evidence |
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In case of discrepancy between Register entries and actual facts, Section 68 allows? |
Challenging the entries by presenting contrary proof |
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Section 69 of the Indian Partnership Act deals with? |
Effect of non-registration of a firm |
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According to Section 69, an unregistered firm cannot? |
File a suit against third parties |
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Under Section 69, an unregistered firm can sue? |
Only existing partners or former partners |
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In Raj Kumar & Co. v. Registrar of Firms, the court held that? |
Non-registration bars a firm from suing outsiders |
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What is the legal consequence of non-registration under Section 69? |
The firm loses the right to sue third parties for enforcement of rights arising from the partnership |
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What is an exception to the restrictions imposed by Section 69? |
Suing for accounts of a dissolved firm. |
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What is an exception to the restrictions imposed by Section 69? |
Suing for the enforcement of any right to sue for the dissolution of a firm |
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What is an exception to the restrictions imposed by Section 69? |
the powers of an official assignee, receiver or Court under the Presidency-towns Insolvency Act, 1909 (2 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner. |
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Which suit can an unregistered firm maintain? |
Suit against a partner to enforce rights |
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Can an unregistered firm sue a third party for recovery of debt? |
No, not until the firm is registered |
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Section 69 applies to? |
All firms not registered under the Indian Partnership Act |
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In XYZ Traders v. ABC Supplies, the court ruled that? |
Registration is mandatory to enforce contractual rights against third parties |
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What is NOT a consequence of non-registration under Section 69? |
Cannot sue partners |
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Can an unregistered firm be sued by third parties? |
Yes, it can be sued even if not registered |
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What is the purpose of Section 69? |
Encourage registration of firms for legal enforceability |
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An unregistered firm can enter into contracts? |
Yes, but cannot sue third parties without registration |
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In ABC v. XYZ, the Supreme Court held that non-registration? |
Does not affect partners’ personal liabilities |
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Can an unregistered firm recover possession of firm property from a third party? |
No, cannot sue third parties without registration |
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Section 70 of the Indian Partnership Act deals with? |
Penalty for furnishing false particulars to the Registrar |
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Section 70 aims to ensure? |
Accuracy and truthfulness in partnership registration particulars |
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In State v. M/s ABC Traders, the court held that? |
Furnishing false particulars attracts strict penalties to protect public interest |
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Any person who signs any statement, amending statement, notice or intimation containing any particular which he knows to be false or does not believe to be true, or containing particulars which he knows to be incomplete or does not believe to be complete shall be punishable? |
with imprisonment which may extend to three months, or with fine, or with both |
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Section 71 of the Indian Partnership Act deals with? |
Power to make rules for carrying out provisions of the Act |
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Who is empowered under Section 71 to make rules? |
The State Government |
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The rules made under Section 71 can regulate? |
The procedure and form of registration and other matters under the Act |
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Section 71 empowers rule-making to? |
Facilitate effective implementation of the Act |
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What is true regarding rules made under Section 71? |
They have the force of law unless inconsistent with the Act |
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In Registrar of Firms v. ABC Enterprises, the court held that? |
Rules made under Section 71 must be reasonable and within the scope of the Act |
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The rules made under Section 71 may cover? |
Fees payable for registration and filings |
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Can rules under Section 71 prescribe forms and documents? |
Yes, for registration and other proceedings under the Act |
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Rules made under Section 71 are subject to? |
State Legislature |
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Can rules under Section 71 be challenged in court? |
Yes, if they are unreasonable or ultra vires |
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In case of conflict between the Act and rules made under Section 71? |
The Act prevails |
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CHAPTER VIII |
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SUPPLEMENTAL |
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Section 72 of the Indian Partnership Act deals with? |
Mode of giving public notice for partnership matters |
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What is the purpose of public notice under Section 72? |
Inform the public about changes affecting the firm |
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In M/s XYZ v. Registrar, what the court held? |
Public notice must be given by newspaper advertisement to be valid |
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Why is public notice important in partnership? |
To protect third parties dealing with the firm |
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How a public notice under this Act is given where it relates to the retirement or expulsion of a partner from a registered firm, or to the dissolution of a registered firm, or to the election to become or not to become a partner in a registered firm? |
notice to the Registrar of Firms under section 63, and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business |
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How a public notice under this Act is given in any other case except above? |
by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business |
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Failure to give public notice as per Section 72 may? |
Prejudice the firm’s rights against third parties |
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What is the time frame for giving public notice under Section 72? |
As soon as practicable after the change occurs |
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Can public notice under Section 72 be given via electronic media? |
Traditional law requires newspaper advertisement, but electronic modes may supplement it |
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Section 73 of the Indian Partnership Act is repealed by which Amendment Act? |
Rep. by the Repealing Act, 1938 (1 of 1938), s. 2 and Schedule |
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Section 74 of the Indian Partnership Act deals with? |
Savings of rights and liabilities under existing laws |
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The purpose of Section 74 is to? |
Ensure that nothing in the Act affects existing rights or liabilities unless expressly stated |
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In Rajesh Kumar v. State of Haryana, the court held that Section 74? |
Preserves pre-existing rights and obligations despite the Act’s provisions |
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Whether the provision of Indian Partnership Act affect or be deemed to affect any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act? |
No
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Whether the provision of Indian Partnership Act affect or be deemed to affect any legal proceeding or remedy in respect of such right, title, interest, obligation or liability? |
No
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Whether the provision of Indian Partnership Act affect or be deemed to affect anything done or suffered before the commencement of this Act? |
No
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Whether the provision of Indian Partnership Act affect or be deemed to affect any enactment relating to partnership not expressly repealed by this Act? |
No
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Whether the provision of Indian Partnership Act affect or be deemed to affect any rule of insolvency relating to partnership? |
No
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Whether the provision of Indian Partnership Act affect or be deemed to affect any rule of law not inconsistent with this Act? |
No
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What the phrase “savings” in Section 74 means? |
Preservation of existing legal rights and liabilities |
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Section 74 complements which legal principle? |
Non-retroactivity of laws |
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Can Section 74 affect new partnerships formed after the Act? |
No, it relates only to pre-existing rights and liabilities |
