Ramesh is a supplier of fruits and vegetables in Azadpur Mandi, Delhi. To expand its business, he invited Suresh and Mahesh (his college friends) to…

Whether the Association will be treated as Partnership? Section 4 of the Indian Partnership Act,1932 states that "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The sharing of profits of a business is an essential feature of partnership. There can be no partnership where only one of the partners is entitled to the whole of the profits of the business. Partners must agree to share the profits in any manner they choose. But an agreement to share losses is not an essential requirement. It is open to one or more partners to agree to share all the losses. Yes, it is a case of partnership. The association between the partners, Ramesh and Suresh will be treated as partnership according to the provisions of the Indian Partnership Act,1932, as there was a partnership agreement according to which they decided to share in profit only. Alternate Answer to 3(a) (i) No, it is not a case of partnership due to lack of the mutual agency which is conclusive evidence of partnership. Mutual agency includes that all partners are jointly and severally liable for the partnership's debts and obligations, even if they didn't directly participate in the specific transaction.