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

Four friends in Jaipur form a group to buy a lottery ticket together. They agree that any prize will be shared equally. The ticket wins Rs 40 lakh. One friend claims they were partners in a lottery business. Which is the correct view?

They are not partners. Partnership requires an agreement to carry on a business and share its profits. Jointly buying a single lottery ticket is not carrying on a business, so sharing the prize does not create a partnership.

  1. AThey are partners because they share the winnings equally
  2. BThey are partners because they invested money jointly
  3. CThey are partners because the number of members is below the statutory limit
  4. DThey are not partners, as there was no business carried on and a one-off venture of this nature is not a businessCorrect

Explanation

A partnership needs a business, which implies a continuing activity with a profit motive. Pooling money to buy one lottery ticket is a mere gamble sharing a prize and no business is carried on. The option on equal sharing is wrong because sharing alone does not create a partnership without a business.

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