Question

According to Section 4 of the Indian Partnership Act, 1932, partnership is the relation between persons who have agreed to share the profits of a business carried on by:

• A. All partners individually
• B. Any government authority
• C. All or any of them acting for all
• D. Only the active partners

Hint:

The essential feature of partnership is: \[ \mathrm{Mutual\ Agency} \] meaning: \[ \mathrm{Each\ partner\ can\ act\ on\ behalf\ of\ all\ partners} \]

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The Indian Partnership Act, 1932 defines partnership in Section 4.
The core of this definition lies in the concept of "Mutual Agency," which means that every partner is both a principal and an agent for all other partners.
Step 2: Detailed Explanation:
According to Section 4: "Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all."
This implies that:
1. Business must be carried on.
2. There must be an agreement to share profits.
3. The business can be managed by all partners collectively.
4. Alternatively, one or more partners can manage the business on behalf of everyone else.
The phrase "acting for all" establishes the legal binding of all partners by the acts of a single partner done in the ordinary course of business.
Step 3: Final Answer:
Therefore, the business can be carried on by all or any of them acting for all.