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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Three friends, Chen, Dara and Eli, decide to run a bakery together to make a profit. They never sign a written document, but they trade under a shared name and divide the profits. Which statement about the formation of their partnership is correct?

A partnership exists. A general partnership arises from carrying on business together with a view to profit, and can be formed orally or by conduct. It needs no written document, registration or equal capital contributions.

  1. ANo partnership exists because there is no written agreement
  2. BA partnership exists, because it can arise from conduct and does not require writing or registrationCorrect
  3. CA partnership exists only after it is registered with the company registrar
  4. DA partnership exists only if each partner contributes equal capital

Explanation

A general partnership is formed by the relationship of carrying on business in common with a view to profit and can be created orally or by conduct. Writing, registration and equal capital are not required, so the statement that no partnership exists is wrong.

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