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

Ishaan and Jyoti agree to share equally the profit of a single transaction of buying and selling a consignment of steel, after which they will have no further dealings. Which statement is correct under the Act?

They can be partners. The Act defines business to include every trade, occupation or profession, and recognises partnership for a particular adventure or undertaking. So a single venture can be a partnership if there is an agreement to share its profits, without any registration or minimum value.

  1. AThey cannot be partners, since the Act requires a continuing business
  2. BThey can be partners, since 'business' includes every trade, occupation or profession, and a single venture can be a business if so intendedCorrect
  3. CThey are partners only if they register a firm
  4. DThey are partners only if the transaction exceeds Rs 1,00,000

Explanation

The Act defines business to include every trade, occupation or profession. A partnership for a particular adventure or undertaking is recognised, so continuity is not mandatory. Registration and a monetary limit are not requirements, so C and D are wrong.

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