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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Ravi, Sunil and Meena agree that their business of running a bookshop will be managed only by Meena, and that all three will share the profits. Meena deals with customers on behalf of all. Which statement is correct?

A partnership exists. The definition requires an agreement to share profits of a business carried on by all or any of them acting for all. Meena runs the shop for all three, so the mutual agency element is satisfied.

  1. AThere is no partnership because Ravi and Sunil do not carry on the business
  2. BThere is no partnership because the business must be carried on by every one of them personally
  3. CThere is a partnership because the business is carried on by one of them acting for all, and profits are sharedCorrect
  4. DThere is a partnership only if they also agree to share losses equally

Explanation

The definition covers a business carried on by all or any of them acting for all. Meena carries on the business acting for all three, and they have agreed to share profits, so the elements are met. Agreement on sharing losses is not part of the definition.

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