All questions of Unit 2: Relations of Partners for CA Foundation Exam

In some states, unless the partnership agreement provides otherwise, a partnership automatically dissolves upon expulsion of a partner. ... However, in many states, a partnership may continue after a partner is expelled even if the agreement is silent on this issue.

Ans B

Implied Authority of Partners in a Firm

Partners in a firm have certain rights and responsibilities that are determined by the partnership agreement. They also have implied authority to act on behalf of the firm in certain situations. Implied authority refers to the power that a partner has to take actions that are necessary and customary for carrying out the firm's business.

Restrictions on Implied Authority

However, there are certain restrictions on the implied authority of partners in a firm. The following are some examples of actions that a partner cannot take without the express authority of the other partners:

1. Enter into partnership on behalf of the firm
A partner does not have the authority to admit a new partner into the firm without the unanimous consent of the other partners. This is because admission of a new partner affects the rights and responsibilities of all partners in the firm.

2. Open a bank account on behalf of the firm
A partner cannot open a bank account on behalf of the firm without the express authority of the other partners. This is because the act of opening a bank account involves the use of the firm's funds, and the other partners must be aware of such transactions.

3. Engaging and discharging employees
A partner cannot hire or fire employees without the express authority of the other partners. This is because employees are an important part of the firm's business and their hiring and firing affects the firm's operations.

4. Accepting any amount of debts due to the partnership firm
A partner cannot accept any amount of debts due to the partnership firm without the express authority of the other partners. This is because accepting debts affects the financial standing of the firm and the other partners must be aware of such transactions.

Conclusion

In conclusion, the implied authority of partners in a firm is an important aspect of their role in the business. However, there are certain restrictions on this authority that must be followed in order to protect the interests of all partners in the firm.

Transfer of Interest in a Partnership Firm

Section 29 of the Indian Partnership Act, 1932 deals with the transfer of a partner's interest in a partnership firm. According to this section, a partner may transfer his interest in the firm in the following ways:

1. By Sale: A partner may transfer his interest in the firm by way of sale. This means that he can sell his share in the partnership to another person.

2. By Charge: A partner may also transfer his interest in the firm by way of charge. This means that he can create a charge on his share in the partnership in favour of another person.

3. By Mortgage: A partner may also transfer his interest in the firm by way of mortgage. This means that he can mortgage his share in the partnership in favour of another person.

4. All of these: The correct answer to the question is option 'D' as a partner can transfer his interest in the firm by sale, charge, and mortgage.

Conditions for Transfer of Interest

However, it is important to note that the transfer of a partner's interest in a partnership firm is subject to certain conditions. These conditions are as follows:

1. The transfer must be in accordance with the partnership agreement, if any.

2. The transfer must not be in contravention of the terms and conditions of the partnership agreement.

3. The transfer must not be in contravention of any provisions of the Indian Partnership Act, 1932.

4. The transfer must not be in contravention of any other law for the time being in force.

5. The transfer must be with the consent of all the partners or in accordance with the partnership agreement.

Conclusion

In conclusion, a partner may transfer his interest in a partnership firm by way of sale, charge or mortgage, subject to certain conditions. It is important for partners to understand these conditions before transferring their interest in the firm to avoid any legal disputes in the future.

ACCORDING TO THE PARTNERSHIP ACT 1932 GENERAL RIGHTS AND DUTIES OF PARTNER PARTNER SHALL indemnify fi loss cause to it by his will full neglected

As it depends upon the agreement of partners

Retirement of a Partner in a Firm

Retirement of a partner in a firm can take place in various ways. The ways in which a partner may retire from an existing firm are as follows:

1. With consent of all partners:
A partner may retire from an existing firm with the consent of all partners. In such a case, the retiring partner must get the consent of all the partners of the firm before retiring.

2. As per express agreement:
Partners may agree on the terms of retirement in the partnership agreement. The terms of retirement can be formulated, and the partner can retire as per the agreement.

3. By written notice in partnership at will:
If the partnership is at will, any partner can retire by giving a written notice to the other partners. The notice must be given in accordance with the agreement between the partners.

All of the above:
The correct option is ‘D’ which means all of the above ways are applicable for a partner to retire from an existing firm.

Conclusion:
A partner may retire from an existing firm with the consent of all partners, as per express agreement, or by giving a written notice in partnership at will. In all the cases, the partner must follow the terms and conditions mentioned in the partnership agreement.

THE INDIAN PARTNERSHIP ACT' 1932 Section.4 of the Indian Partnership Act, 1932 defines Partnership in the following terms: “ 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.”

A Joint Life Policy (JLP) is an insurance policy which is taken out by the partnership firm on the joint lives of all the partners. The amount of policy is payable by the Insurance Company either on the death or on maturity of policy, whichever is earlier. The firm pays annual premium to the insurer against the policy.

A firm under the general law is not a distinct legal entity and has no legal existence of its own. The partnership property vests in all the partners and in that sense every...partner has an interest in assets of the partnership. However, during the subsistence of the partnership no partner can deal with any portion of the property as his own. In...: “....The whole concept of partnership is to embark upon a joint venture and for that purpose to bring in as capital money or even property including immovable property. 

Access to Books of Accounts by a Sleeping Partner

Background: Robert is a sleeping partner in a partnership firm and he wants to inspect the books of accounts due to certain allegations of financial impropriety by some of the partners. The other partners in the firm have denied access to the books of accounts.

Legal position: The action of the other partners in denying access to books of accounts to a sleeping partner is not correct since Robert has the right of access to books of accounts as a partner in the firm.

Explanation:
Partnership is a type of business organization where two or more persons come together to carry on a business with a view to making profits. In a partnership firm, the partners contribute capital, share profits and losses, and have a right to participate in the management of the firm. A sleeping partner is a partner who contributes capital but does not take part in the management of the firm.

The rights and duties of partners in a partnership firm are governed by the Partnership Act, 1932. According to the Act, every partner has the right to inspect and have access to the books of accounts of the firm. This right is not affected by the fact that the partner is a sleeping partner or does not take part in the management of the firm.

In the present case, Robert, as a partner in the firm, has the right to inspect and have access to the books of accounts. The fact that he is a sleeping partner does not affect this right. The other partners in the firm cannot deny him access to the books of accounts.

If any partner is denied access to the books of accounts, he can approach the court for relief. The court may order the other partners to allow access to the books of accounts or take any other appropriate action.

Conclusion: In conclusion, the action of the other partners in denying access to books of accounts to a sleeping partner is not correct since Robert has the right of access to books of accounts as a partner in the firm.

The heirs of the deceased partner and their rights

The heirs of a deceased partner in a partnership firm have certain rights and limitations. Let's explore these in detail:

Right to claim share in profits and assets

The heirs of a deceased partner have a right to claim their share in the profits and assets of the partnership firm. This is based on the terms of the partnership agreement and the relevant laws.

Limitations on becoming a partner in the firm

However, when it comes to becoming a partner in the firm, the heirs of the deceased partner have some limitations. These are as follows:

Consent of surviving partners required

The heirs of the deceased partner can become a partner in the firm of the deceased partner only if the surviving partners give their consent in this regard. This is because partnerships are based on mutual trust and agreement between partners. The surviving partners may not want to admit new partners or may prefer to dissolve the partnership altogether.

No automatic right to become a partner

The heirs of the deceased partner do not have an automatic right to become a partner in the firm of the deceased partner. This is because partnership is a voluntary association of persons and the decision to admit new partners lies with the existing partners.

Conclusion

In conclusion, the heirs of a deceased partner have certain rights to claim their share in the profits and assets of the partnership firm. However, the right to become a partner in the firm is subject to the consent of the surviving partners and is not automatic.

Transfer of a partner refers to the process of a partner transferring their ownership interest in a partnership to another person or entity. This can occur for various reasons, such as the partner retiring, leaving the business, or selling their ownership stake.

The transfer of a partner typically involves several steps and considerations:

1. Reviewing the partnership agreement: The partnership agreement should outline the process for transferring a partner's interest. It may include provisions for how the transfer is to be conducted, any restrictions on transfers, and the valuation of the partner's interest.

2. Obtaining consent: In many partnerships, the consent of all partners is required for a transfer to take place. This ensures that all partners have a say in who becomes a new partner and maintains the balance of power within the partnership.

3. Valuing the partner's interest: The partnership agreement may provide a method for valuing a partner's interest in the business. This can be determined by factors such as the partner's capital account balance, the fair market value of the partnership, or a pre-determined formula.

4. Finding a buyer: Once the partner's interest is valued, the partner may need to find a buyer who is willing to purchase their ownership stake. This can be done through negotiations with existing partners, bringing in new partners, or selling the interest to a third party.

5. Legal and financial considerations: Transferring a partner's interest may involve legal and financial processes, such as drafting transfer agreements, updating partnership documents, and filing necessary paperwork with relevant authorities.

6. Admitting a new partner: Once the transfer is complete, the new partner is admitted into the partnership. This may involve updating partnership agreements, allocating profits and losses, and providing the new partner with the necessary rights and responsibilities.

It's important to note that the specific steps and considerations for transferring a partner can vary depending on the partnership agreement and applicable laws. Consulting with legal and financial professionals is advisable to ensure a smooth and legally compliant transfer process.

Expulsion of a Partner from a Firm

Introduction
In a partnership firm, the partners have a mutual agreement to carry on the business together. However, there may be situations where a partner's conduct or actions may warrant their expulsion from the firm. The process of expelling a partner is governed by the partnership agreement or the relevant laws in the jurisdiction.

Consent of Partners
The question states that the partner of the firm can be expelled with the consent of the majority of the partners. This means that in order to expel a partner, the majority of the partners must agree to the expulsion.

Explanation
Let's understand the options given in the question and why the correct answer is option 'B':

a) All the partners: If the consent of all the partners is required to expel a partner, it would mean that even a single dissenting partner can prevent the expulsion. This would give each partner veto power, making it difficult to expel a partner even in cases where it may be necessary for the smooth functioning of the firm. Therefore, this option is not practical.

b) Majority of the Partners: This is the correct answer. In most partnership agreements, the expulsion of a partner can be done with the consent of the majority of the partners. This means that if more than 50% of the partners agree to the expulsion, it can be carried out. This allows for a fair and democratic process where the decision is based on the collective judgment of the majority.

c) Any working partner of the firm: All partners, including non-working partners, should have a say in the expulsion of a partner. However, the consent of any single working partner is not sufficient to expel a partner. The decision should be made collectively by the partners as per the partnership agreement.

d) None of the above: This option is incorrect as the expulsion of a partner requires the consent of the majority of the partners, as explained above.

Conclusion
In conclusion, the partner of a firm can be expelled with the consent of the majority of the partners. This ensures that the decision is made collectively and takes into account the interests of the majority of the partners. It is important to refer to the partnership agreement and relevant laws to understand the specific requirements and procedures for expelling a partner in a particular jurisdiction.

's liability is limited to the amount of capital invested in the partnership
d)It depends on the terms of the partnership agreement.

The correct answer is d) It depends on the terms of the partnership agreement. The partnership agreement will determine the extent of C's liability as a sleeping partner. If the agreement states that C is only liable for the amount of capital invested, then option c) is also true. However, if the agreement states that C has unlimited liability, then option a) would be true. It is important for partners to clearly outline the terms of their partnership agreement to avoid misunderstandings and legal issues in the future.

A Joint Life Policy (JLP) is an insurance policy which is taken out by the partnership firm on the joint lives of all the partners. So, any claim which is received by the firm on the death of a partner is divided among the partners and credited to their capital accounts in their profit sharing ratio.

Consent for admitting a new partner in a firm

In a partnership firm, the admission of a new partner is a crucial decision that requires the consent of the existing partners. The consent of the partners ensures that all the partners are on board with the decision and have agreed to accept the new partner into the firm. The question asks for the correct option regarding the consent required for admitting a new partner in the firm. Let's analyze each option:

a) Unanimous consent of all the partners:
Unanimous consent refers to the agreement or approval of all the partners in the firm. In this case, for a new partner to be admitted, every single partner must give their consent. This means that no partner can object to the admission of the new partner. This option is considered the correct answer.

b) Consent of the majority of the partners:
Majority consent implies that the decision to admit a new partner is approved by more than 50% of the partners. However, this option does not guarantee that all partners are in agreement. It is possible for a few partners to dissent or have reservations about the admission of the new partner. Consequently, this option is not the correct answer.

c) Special majority of partners:
Special majority refers to a higher threshold of consent required for a particular decision. It usually exceeds the simple majority and may require a specified percentage or a specific number of partners to give their consent. Since this option does not provide clarity on the required threshold, it is not the correct answer.

d) New partner only:
This option suggests that the new partner alone has the authority to admit themselves into the firm. However, in a partnership, the decision to admit a new partner is a collective one. Therefore, this option is not the correct answer.

In conclusion, the correct answer is option 'A', which states that a new partner can be admitted in the firm with the unanimous consent of all the partners. This ensures that all partners are in agreement and have given their approval for the admission of the new partner.

Answer:



In a partnership firm, each partner has certain rights and responsibilities. One of the crucial rights that every partner possesses is the right to take part in the conduct of business of the firm. However, this right is subject to the contract between the partners.

Contractual Agreement:

Partnerships are governed by a partnership agreement, which is a contract between the partners. The agreement outlines the rights and obligations of each partner. It may contain provisions regarding the participation of partners in the business activities of the firm. The agreement may specify the level of involvement each partner has or restrict the involvement based on certain conditions.

For example, the agreement may require unanimous consent for certain significant decisions or may assign specific responsibilities to different partners. In such cases, the right to take part in the conduct of business may be limited or subject to the agreement between the partners.

Exceptions:

Apart from the contractual agreement, there may be other factors that can influence a partner's right to participate in the conduct of business. These factors can include the desires of the firm, customers, or clients. In certain situations, it may be necessary to limit the involvement of partners based on the specific needs of the firm or the preferences of the customers or clients.

For instance, if the firm is dealing with sensitive information or requires specialized expertise, the partners may decide to restrict the participation of certain partners to maintain confidentiality or ensure efficiency. Similarly, if the firm has specific client requirements or preferences, the partners may need to allocate responsibilities accordingly.

Conclusion:

In conclusion, every partner of a partnership firm generally has a right to take part in the conduct of business. However, this right can be subject to the contractual agreement between the partners and the specific needs or desires of the firm, customers, or clients. It is crucial for partners to have a clear understanding of their rights and obligations as outlined in the partnership agreement and to work together to ensure the smooth functioning of the firm.

And void
b) Valid
c) Optional
d) Irrelevant

a) Null and void

Heirs of the Deceased Partner - CA Foundation

Introduction
When a partner in a firm dies, the question arises as to what happens to the deceased partner's share in the partnership. In such a case, the heirs of the deceased partner come into the picture. This article discusses the rights of the heirs of the deceased partner in a partnership firm.

Rights of the Heirs

The heirs of the deceased partner have certain rights in a partnership firm. These rights are discussed below:

Right to Share in the Profits and Losses of the Firm
The heirs of the deceased partner have the right to receive their share in the profits and losses of the firm up to the date of the death of the deceased partner. This means that the profits and losses of the firm up to the date of the death of the deceased partner shall be shared by the surviving partners and the heirs of the deceased partner in the proportion of their respective shares.

Right to Inspect the Books of Accounts
The heirs of the deceased partner have the right to inspect the books of accounts of the firm. This right is available to them to enable them to know the financial position of the firm.

Right to Receive Interest on the Amount Due to the Deceased Partner
The heirs of the deceased partner are entitled to receive interest on the amount due to the deceased partner from the date of his death until the date of payment. The rate of interest should be reasonable and should be agreed upon by the surviving partners and the heirs of the deceased partner.

Right to Become a Partner in the Firm of the Deceased Partner
The heirs of the deceased partner have a right to become a partner in the firm of the deceased partner. However, this right is subject to the following conditions:

- The surviving partners must give their consent for the heirs to become partners in the firm.
- The heirs must fulfill the conditions for becoming a partner in the firm, such as contributing capital, participating in the management of the firm, etc.

Conclusion
In conclusion, the heirs of the deceased partner have certain rights in a partnership firm, such as the right to share in the profits and losses of the firm, the right to inspect the books of accounts, the right to receive interest on the amount due to the deceased partner, and the right to become a partner in the firm of the deceased partner subject to certain conditions.

Test of Good Faith under Indian Partnership Act, 1932

The Indian Partnership Act, 1932 provides for the expulsion of a partner in certain circumstances. However, such expulsion must be done in good faith and in accordance with the provisions laid down in the Act. The test of good faith is provided under Section 33(1) of the Act, which requires the following:

Notice to the Partner

The partner to be expelled must be served with a notice before the expulsion takes place. The notice should clearly state the grounds on which the expulsion is being sought and the date and time of the meeting where the matter will be discussed.

Opportunity of Being Heard

The partner to be expelled must be given an opportunity of being heard. This means that he or she must be given a chance to present his or her side of the matter and defend himself or herself. This is an essential requirement of natural justice.

Expulsion in the Interest of Partnership

The expulsion must be in the interest of the partnership. This means that the partner must have done something that is detrimental to the partnership or that goes against the terms of the partnership agreement. The expulsion must be necessary to protect the interests of the other partners and the business.

Conclusion

In conclusion, the test of good faith under the Indian Partnership Act, 1932 requires that the partner to be expelled is served with a notice, given an opportunity of being heard, and that the expulsion must be in the interest of the partnership. All of these requirements must be met before a partner can be expelled.

Implied Authority and Third Party:

Implied authority refers to the authority that is not expressly granted to an agent but is necessary to carry out his/her duties or responsibilities. It is based on the conduct of the principal and the agent, and the circumstances surrounding their relationship. A third party dealing with an agent may rely on the agent's apparent authority or implied authority to enter into a transaction on behalf of the principal.

Effect of Limitation of Implied Authority on Third Party:

When an agent exceeds his/her implied authority, the principal may not be bound by the transaction unless he/she ratifies it. However, the limitation of implied authority does not affect a third party unless he/she has actual notice of it.

Explanation:

The principle of law underlying this concept is that a third party dealing with an agent should not be penalized for the principal's failure to communicate the limitation of the agent's authority. Thus, if a third party has no knowledge of the limitations of the agent's authority, he/she may assume that the agent has the necessary authority to act on behalf of the principal.

For example, if a company's sales representative has the implied authority to sell products up to a certain limit but exceeds that limit in a transaction without the knowledge of the buyer, the buyer may assume that the representative has the necessary authority to enter into the transaction. Thus, the limitation of implied authority will not affect the buyer's rights in the transaction unless he/she had actual notice of the limitation.

Conclusion:

In conclusion, the limitation of implied authority does not affect a third party unless he/she has actual notice of it. This principle protects the interests of third parties who rely on the apparent or implied authority of an agent to enter into a transaction with a principal.

Act of Firm. Section 2 of the Act defines act of firm as any act or omission by all the partners (or by any partner or agent of the firm) which gives rise to a right enforceable by or against the firm. ... The act of the firm therefore binds all the partners of the firm as if it were an act done by all of them. Such minor's share is liable for the acts of the firm, but the minor is not personally liable for any such act. his share in the property and profits of the firm shall be the share to which he was entitled as a minor.

Explanation:

1. Partner by Estoppel:
When a person represents himself as a partner in a business, either by words or conduct, and others rely on this representation and extend credit to the business, the person making the representation (Y in this case) can be held liable as if he were a partner. This is known as a partner by estoppel.

2. Situation in the given scenario:
In the given scenario, X introduced Y as a partner in the business to Z. Even though Y was not actually a partner, he did not deny the statement made by X. As a result, Z believed Y to be a partner and extended a loan to X based on this belief.

3. Legal Implications:
Since Y did not deny being a partner and Z relied on this representation to give a loan to X, Y can be held liable for the repayment of the loan under the principle of partner by estoppel. This means that Y will be treated as if he were a partner in the business for the purpose of repaying the loan.

4. Responsibility of Y:
As a partner by estoppel, Y has a legal obligation to repay the loan taken by X from Z. Even though Y was not actually a partner in the business, his actions led Z to believe otherwise, and therefore he is responsible for the repayment of the loan.

In conclusion, in the given scenario, Y can be held responsible for the repayment of the loan taken by X from Z because of the principle of partner by estoppel. This highlights the importance of being truthful in business dealings to avoid legal liabilities.

• Requirement for Change: A change in nature of business can only be effected with the unanimous consent of all partners.


• Unanimous Consent: This means that all partners, whether they are majority partners, working partners, or sleeping partners, must agree to the change.


• Importance of Unanimous Consent: It is crucial to have unanimous consent to ensure that all partners are on board with the decision and to prevent any conflicts or disagreements in the future.


• Legal Implications: Without unanimous consent, any change in nature of business may not be legally valid and could lead to disputes among partners.


• Decision Making Process: Partners should discuss and communicate openly to reach a consensus on the proposed change before moving forward with any decisions.


• Documentation: It is important to document the decision and the consent of all partners in writing to avoid any misunderstandings or disputes later on.

By following these guidelines and obtaining unanimous consent from all partners, a change in nature of business can be effectively implemented within the partnership.

B is correct b'coz such decisions will be taken after the consent of all partners

The firm is acting on behalf of another party. This is known as undisclosed agency. In this situation, the third party may believe that they are dealing directly with the firm and may not be aware that the firm is acting as an agent for someone else. This can create confusion and potentially lead to legal issues if the third party feels that they have been misled or deceived. It is important for firms to be transparent about their agency relationship and to communicate this information to all parties involved in the transaction.

For 500 pieces of shirts from a manufacturer. The cost of each shirt is $10. Y received the order and realized that the manufacturer sent 550 pieces of shirts instead of 500.

The total cost of the shirts would be 550 * $10 = $<550*10=5500>>5500.
Since X placed the order, X would be responsible for paying for the shirts.
The total cost of the shirts will be divided equally between X and Y since they are partners.
Therefore, X would need to pay $5500 / 2 = $<5500 =2750="">>2750 for the extra shirts.

Explanation:

When a partner is irregularly expelled from a partnership firm, they do have certain rights. The correct answer is option 'C', which means both (a) right to reinstatement and (b) right to get back their share of profit and property in the firm.

Right to Reinstatement:
When a partner is irregularly expelled from a partnership firm, it means that the expulsion was not done in accordance with the terms and conditions of the partnership agreement or the provisions of the Partnership Act. In such a case, the expelled partner has the right to be reinstated back into the firm.

Right to Get Back Share of Profit and Property:
An irregularly expelled partner also has the right to get back their share of profit and property in the firm. This means that they are entitled to receive their rightful share of profits and assets that they would have received if they had not been expelled. The expelled partner's share of profit and property should be calculated based on their proportionate ownership in the firm.

Importance of these Rights:
These rights are important to ensure fairness and justice in the partnership firm. Irregular expulsion can cause financial and reputational damage to the expelled partner, and these rights aim to provide them with a remedy for the injustice they have faced. By reinstating the partner and granting them their rightful share, the firm can restore balance and uphold the principles of partnership law.

Conclusion:
When a partner is irregularly expelled from a partnership firm, they are not left without any recourse. They have the right to be reinstated back into the firm and to receive their share of profit and property. These rights are crucial in maintaining fairness and justice within the partnership and ensuring that all partners are treated equitably.

• Restricted by contract between partners: The implied authority of a partner can be restricted by the terms of the partnership agreement. This means that certain actions or decisions may require the consent of all partners, limiting the authority of an individual partner.



• Extended by contract between partners: Conversely, the implied authority of a partner can also be extended through the partnership agreement. Partners may agree to give certain partners additional authority to act on behalf of the partnership in specific situations.



• Either extended or restricted by contract between partners: The partnership agreement plays a crucial role in defining the scope of a partner's authority. It can either extend or restrict the implied authority of a partner based on the terms and conditions agreed upon by all partners.

's name and Mini was responsible for paying the bills. However, the goods were defective and the firm refused to take responsibility for them. Mini was left with a huge debt and had no way to pay it off. She felt betrayed by her partners and was angry and frustrated. She decided to seek legal advice to see if there was any way she could hold her partners accountable for the debt. After consulting with a lawyer, Mini learned that she could file a lawsuit against her partners for breach of contract and seek damages for the debt she had incurred. She decided to go ahead with the lawsuit and after a long legal battle, she was able to win the case and receive compensation for the debt. Mini learned a valuable lesson about the importance of protecting herself in business partnerships and vowed to be more cautious in the future.

's liability for subsequent debts incurred by A and B depends on the partnership agreement and the laws of the jurisdiction in which the partnership is located.

Explanation:

A sleeping partner, also known as a silent partner, is a partner in a partnership who is not actively involved in the management and day-to-day operations of the business. However, they still have a financial interest in the partnership and share in its profits and losses.

In general, the liability of a sleeping partner for the debts and obligations of the partnership depends on the terms of the partnership agreement and the laws of the jurisdiction in which the partnership is located.

If the partnership agreement explicitly states that the sleeping partner is not liable for the subsequent debts incurred by the active partners (A and B), then option (b) would be true. However, if the partnership agreement does not provide for such an exemption, the sleeping partner may be held liable for the debts incurred by the partnership, including those incurred by the active partners. In such a case, option (a) would be true.

It is important to note that the liability of a sleeping partner may also be limited by the laws of the jurisdiction in which the partnership is located. For example, in some states, sleeping partners may have limited liability protection similar to that of limited partners in a limited partnership. In such cases, the sleeping partner may not be personally liable for the debts of the partnership beyond their investment in the business.

Therefore, option (c) is also partially true, as the liability of the sleeping partner depends on several factors and cannot be determined without considering the partnership agreement and the laws of the jurisdiction in which the partnership is located.

In this question , there no specified that from when liability is mention. And question is telling you that what liability of new partner in the firm so it is depend upon their terms and condition of agreement which is partnership agreement.

Because to open a bank account on partner's name, become a right of partner if it is mentioned in partnership deed with the consent of all partners at the time of writing deed.

Expulsion of a Partner from a Firm

Expulsion of a partner refers to the termination of partnership of a particular partner from a firm. The power of expulsion is a legal right conferred upon the remaining partners of the firm to terminate the partnership of a partner due to certain reasons.

Conditions for Expulsion

The power of expulsion can be exercised by the remaining partners of the firm on the fulfilment of certain conditions, as mentioned below:

Express Contract: The power of expulsion must be given by an express contract between the partners of the firm. The contract must define the circumstances under which a partner can be expelled from the firm.

Good Faith: The power of expulsion must be exercised in good faith by the remaining partners of the firm. The expulsion must not be arbitrary or malicious, and should be done for the benefit of the firm as a whole.

Majority of Partners: The power of expulsion can be exercised only by the majority of the partners of the firm. The decision to expel a partner must be taken by a majority vote of the partners.

Conclusion

Thus, it can be concluded that the power of expulsion can be exercised by the remaining partners of the firm only under certain conditions. The power must be given by an express contract, and must be exercised in good faith by a majority vote of the partners.

• All Partners: Share in Partnership can be transferred by the consent of all partners. This means that all partners must agree to the transfer of the share.



• Majority: It is not sufficient for just a majority of partners to consent to the transfer of share in partnership. Unanimous agreement is required.



• No Consent Required: In some cases, the partnership agreement may specify that certain transfers do not require the consent of all partners. However, this is not common and usually, all partners' consent is required.



• None of these: This option is incorrect as the correct answer is that the consent of all partners is required for transferring share in partnership.