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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Dev, Esha and Farhan run a firm formed to complete one construction project. The project is finished and the contract is over. In the absence of any contract to the contrary, how does the Act treat the firm?

The firm stands dissolved on completion of the project. Under the Indian Partnership Act, 1932, a firm formed for a particular adventure or undertaking is dissolved when it is completed, unless the partners have agreed otherwise, so no resolution or registrar action is needed.

  1. AIt is dissolved by the completion of the venture for which it was formedCorrect
  2. BIt continues until the partners pass a resolution to dissolve it
  3. CIt is dissolved only if the Registrar of Firms cancels its registration
  4. DIt continues as a partnership at will

Explanation

Under the Act, a firm is dissolved by the completion of the adventure or undertaking for which it was constituted, subject to a contrary contract. No resolution or action by the Registrar is needed. Continuing as a partnership at will arises only when the partners carry on business after the fixed term expires, not after a single venture ends.

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