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To a Nominal Partner, which of the following condition does not apply?
- a)He gives his name to the firm
- b)He does not take part in firm’s business
- c)He does not invest in the firm
- d)He is not liable to third parties
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
To a Nominal Partner, which of the following condition does not apply?...
Partnership Firm Agreement:
A partnership firm comes into existence by agreement between all the partners. The agreement can be either express or implied.
Express Agreement:
- Express agreement is a written or oral agreement that clearly states the terms and conditions of the partnership.
- It is a formal agreement where all the partners explicitly express their consent to form a partnership.
- The terms of the partnership, such as capital contributions, profit sharing, responsibilities, and decision-making authority, are clearly mentioned in the agreement.
- This type of agreement provides clarity and avoids misunderstandings among the partners.
Implied Agreement:
- Implied agreement refers to the agreement that is inferred from the conduct, actions, or behavior of the partners.
- It is a non-verbal agreement where the partners engage in business activities together without explicitly discussing or documenting the terms of the partnership.
- The existence of an implied agreement is determined by the actions and behaviors of the partners, such as sharing profits, contributing capital, participating in decision-making, and presenting themselves as partners to others.
- Although not as formal as an express agreement, an implied agreement can still create a legal partnership.
Registered:
- While partnership firms may need to be registered with the appropriate government authorities for certain legal benefits and obligations, the agreement itself does not need to be registered.
- Registration requirements vary by jurisdiction, and partners should consult local regulations to determine if registration is necessary.
Conclusion:
A partnership firm can be formed through either an express agreement or an implied agreement. Both types of agreements are legally valid and can create a partnership. It is important for partners to clearly define their rights, responsibilities, and profit-sharing arrangements to avoid any conflicts or misunderstandings. While registration of the partnership firm may be required in some jurisdictions, the agreement itself does not need to be registered.
This question is part of UPSC exam. View all CA Foundation courses
Most Upvoted Answer
To a Nominal Partner, which of the following condition does not apply?...
Nominal partner is one who
* lends his name
* doesn't take part in the business
* doesn't invest in the business
* BUT he is liable to the 3rd parties
* lends his name
* doesn't take part in the business
* doesn't invest in the business
* BUT he is liable to the 3rd parties
Community Answer
To a Nominal Partner, which of the following condition does not apply?...
C) He contributes capital to the firm
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To a Nominal Partner, which of the following condition does not apply?a)He gives his name to the firmb)He does not take part in firm’s businessc)He does not invest in the firmd)He is not liable to third partiesCorrect answer is option 'D'. Can you explain this answer?
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