Question

Which of the following is not an essential feature of partnership?

• A. It has at least two persons.
• B. An agreement exists between/among all the partners.
• C. Profits and losses are shared equally.
• D. Agreement is for a business.

Hint:

In partnership: \[ \mathrm{Profit\ sharing\ ratio} \] may be: \[ \mathrm{Equal\ or\ Unequal} \] depending upon agreement among partners.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
To be a partnership, certain "essential elements" must be present.
If any of these are missing, it is not a partnership in the eyes of the law.
Step 2: Detailed Explanation:
Essential features of a partnership include:
1. Two or more persons: Minimum 2, maximum 50 (as per Companies Act 2013).
2. Agreement: Partnership is the result of a contract.
3. Business: There must be a lawful business carried on with a motive to earn profit.
4. Sharing of Profits: Partners must agree to share profits.
5. Mutual Agency: Business carried on by all or any of them acting for all.
Analysis of Option (C): While sharing profits is essential, sharing them equally is not.
Partners can agree to share in any ratio they like (e.g., 3:2:1).
Equal sharing is only a "default rule" when the agreement is silent, not a mandatory feature.
Step 3: Final Answer:
Sharing profits equally is not an essential feature; sharing profits in {any} agreed ratio is.