State whether the following are partnerships under the Indian Partnership Act, 1932: (i) A and B buy commodity X and agree to sell the commodity…

CA Foundation · Business Laws · RTP · September 2024
State whether the following are partnerships under the Indian Partnership Act, 1932: (i) A and B buy commodity X and agree to sell the commodity with sharing the profits equally. (ii) Two firms each having12 partners combine by an agreement into one firm. (iii) A and B, co -owners, agree to conduct the business in common for profit. (iv) Some individuals form an association to which each individual contributes 5000annually. The o bjective of the association is to produce clothes and distribute the clothes free to the war widows. (v) A and B, co -owners share between themselves the rent derived from a piece of land.

Suggested Answer and Working Notes:

(i) Yes: This is a case of partnership as there exists the element of doing business and sharing of profits equally. (ii) Yes: This is a case of partnership because there is an agreement between two firms to combine into one firm. (iii) Yes: This is a case of partnership because A & B, co-owners, have agreed to conduct a business in common for profit. (iv) No: This is not a case of partnership as no charitable association can be floated in partnership. (v) No: This is not a case of partnership as they are co-owners and not the partners. Further, there exists no business.

Topics: The Indian Partnership Act, 1932

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