Page 186 - DMGT407Corporate and Business Laws

Unit 6: Partnership Act and Limited Liability Act

6.11 Keywords Notes

Dissolution of the Firm: The dissolution of partnership between all the partners of a firm is called
the dissolution of the firm.

Economic Interest: It means a member’s share of the profits and losses of an LLC and a member’s
right to receive distributions of the LLC’s assets.
Foreign LLC: It means an LLC formed under the laws of any foreign jurisdiction.

Goodwill: It is an accounting concept meaning the value of an entity over and above the value
of its assets.
LLC: Limited Liability Company

LLP: It is the partnership where all or some partners have limited liability.
Partnership Deed: It is an agreement between the partners which covers the various clauses
required for management of the firm.

6.12 Review Questions

1. What is a partnership? Briefly state special features of a partnership on the basis of which
its existence can be determined under the Indian Partnership Act.
2. Explain the procedure for getting a partnership firm registered. When is such a registration
treated as complete?
3. Explain the following: (i) Partner by holding out, or by estoppel. (ii) Dormant or sleeping
partner. (iii) Nominal partner. (iv) Sub-partner. (v) Working partner. (vi) Incoming partner.
(vii) Outgoing partner. (viii) Limited partnership.

4. What are the provisions of the Indian Partnership Act with regard to the admission of a
minor into the partnership? What will be his rights and liabilities during his minority and
after he has attained the majority?

5. Enumerate the rights and duties of partners inter se.
6. What is meant by the implied authority of a partner to bind the firm? State the acts of a
partner for which he does not have the implied authority to bind the firm.

7. Analyse the advantages of formation of companies with limited liabilities. Analyse the
power of the government in such companies.
8. Do you think it is wiser enough on the part of the companies to form a company with a
limited liability? Justify.
9. Your company is a private limited concern and after running the company for 5 years,
now you want to wind up the company. Analyse the liability of the members of the
company.

10. Critically examine the limited liability act with its pros & cons.
11. A and B purchased a tea shop by contributing equal amounts. They incurred some expenses
in decoration of the shop. They leased the shop on an understanding to share the rent
equally. Are A and B partners?
12. A, B and C are three partners in a firm. According to partnership deed, A is entitled to half
of the partnership property and profits. A becomes insolvent but B and C continue the

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