State whether the following are partnerships under the Indian Partnership Act, 1932:
i) A and B buy commodity X and agree to sell the commodity with sharing the profits equally.
ii) Two firms each having 12 partners combine by an agreement into one firm.
iii) A and B, co-owners, agree to conduct the business in common for profit.
iv) Some individuals form an association to which each individual contributes ` 5000 annually. The objective of the association is to produce clothes and distribute the clothes free to the war widows.
v) A and B, co-owners share between themselves the rent derived from a piece of land.
OR
i) A and B jointly own a car which they used personally on Sundays and holidays and let it on hire as taxi on other days and equally divide the earnings.
OR
a) X, a contractor, appointed Y one of his servants to manage his business of loading and unloading railway wagons. Y was to receive 50% of the profits of the business and also to bear the losses, if any.
g) 10 major persons form an association to which each member contributes ` 10,000. The purpose is to produce medicines for free distribution to poor patients.

Question

State whether the following are partnerships under the Indian Partnership Act, 1932:
i) A and B buy commodity X and agree to sell the commodity with sharing the profits equally. 
ii) Two firms each having 12 partners combine by an agreement into one firm. 
iii) A and B, co-owners, agree to conduct the business in common for profit. 
iv) Some individuals form an association to which each individual contributes ` 5000 annually. The objective of the association is to produce clothes and distribute the clothes free to the war widows. 
v) A and B, co-owners share between themselves the rent derived from a piece of land.
OR
i) A and B jointly own a car which they used personally on Sundays and holidays and let it on hire as taxi on other days and equally divide the earnings.
OR
a) X, a contractor, appointed Y one of his servants to manage his business of loading and unloading railway wagons. Y was to receive 50% of the profits of the business and also to bear the losses, if any.
g) 10 major persons form an association to which each member contributes ` 10,000. The purpose is to produce medicines for free distribution to poor patients.

Accepted Answer

i) Yes, this is a case of partnership as there exists the element of doing business and sharing of profits equally. 
ii) Yes, this is a case of partnership because there is an agreement between two firms to combine into one firm. 
iii) Yes, this is a case of partnership because A & B, co-owners, have agreed to conduct a business in common for profit. 
iv) No, this is not a case of partnership as no charitable association can be floated in partnership. 
v) No, this is not a case of partnership as they are co-owners and not the partners. Further, there exist no business.
OR
i) No, this is not a case of partnership because the sharing of profits or of gross returns accruing from property holding joint or common interest in the property would not by itself make such persons partners. 
Alternatively, this part can also be answered as below: 
Yes, this is a case of partnership, as the car is used personally only on Sundays and holidays and used for most of the days as a Taxi. Hence, it is inferred that the main purpose of owning the car is to let it for business purpose. Also, there is an agreement for equally dividing the earnings.
OR
a) No, this is a case of partnership because no mutual agency relationship exist among X and Y.
g) No, this is not a case of partnership as there is no intention to carry on the business and to share the profits thereof.

Question Scenario

Suggested Answer

2. Analysis & Application of Facts

Ready to Practice More Law Cases?