Page 146 - DMGT102_MERCANTILE_LAWS_I

Mercantile Laws-I

Notes z A partnership can be formed for genuine business purposes which are not illegal or
prohibited by law. The liability of certain partners is limited to the amount of capital which
they have agreed to contribute to the business.
z The two sections when read together provide that 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 fi rm,

provided the act is done in the fi rm’s name, or in any manner expressing or implying an

intention to bind the firm. Such authority of a partner to bind the firm is called his implied

authority.
10.7 Keywords

Dissolution: Dissolution (law), in law, means to end a legal entity or agreement such as a
marriage, adoption, or corporation.
Firm: Any business entity such as a corporation, partnership, limited liability company, sole
proprietorship, or “private equity” “investment (fi rm) organization”
Partnership: A partnership is a type of business entity in which partners (owners) share with
each other the profits or losses of the business.

Proprietorship: A proprietorship is a company which is not registered with the state as a limited
liability company or corporation.

10.8 Self Assessment

State whether the following statement is true or false:

1. An unregistered partnership is illegal.

2. An unregistered partnership firm is not illegal but its rights are not enforceable.

3. It is obligatory for a firm to be registered under the Indian Partnership Act.

4. A firm is liable for the wrongful acts of a partner.

5. The Indian Partnership Act has effectively ensured the registration of firms without making
it compulsory.

6. A person can be admitted as a partner in a firm with the consent of the majority of
partners.
7. A minor can be a partner in a fi rm.
8. There can be thirty partners in a fi rm.
9. ‘Partnership’ and ‘firm’ are synonymous.

10. A firm can enter into a partnership agreement with another fi rm.
Fill in the blanks:

11. A partner is not entitled to claim ..................... .

12. Sharing of profits is a conclusive evidence of ..................... .
13. Registration of a partnership firm is effective from the date when the registrar fi les the

statement & makes entries in the ..................... .
14. A firm cannot sue a person for the price of goods it ..................... .

15. Dissolution of firm by agreement come under ..................... .

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