CPT Sec.

B Mercantile Law
Indian Partnership Act, 1932

Practical Questions

1. A, B, C and D established a partnership for refining sugar. A was considered expert in the job
of buying sugar. Thus A was entrusted with the duty of purchasing sugar for the firm. A
himself was a wholesale dealer in sugar. He, unknown to his co-partners, supplied to the firm,
at the market price, with sugar previously bought by himself from his own resources when the
price was lower, and he so made considerable profit. B, C and D sued for the profits thus
made by him. Is A accountable?

2. A, B and C agreed to form a partnership. The partnership deed provided that all the three shall
share the profits equally. Afterwards they carried on the partnership business for many years,
A receiving one-half of the net profits and the other half being equally divided between B and
C, to which B and C never objected. The partnership developed some differences and as such
B and C file a suit for their share of profits for the past years on the basis of the partnership
deed. Decide.

3. A and B are partners in a business. A, without the knowledge of B, acting within the general
scope of his authority as a partner bribed C’s clerk, and induced him in breach of his duty to
his employer, to disclose some secrets relating to C’s business. C, as a result suffers a loss. Is
B liable for the acts of A?

4. A,B, and C are partners. An order is placed with D for supplying a certain quantity of goods to
the firm on credit. Before D could supply the goods C died. D supplies the goods after C’s
death, being totally ignorant about the fact of C’s death. A and B subsequently become
insolvent. Can D make C’s estate liable for his debt?

5. A and B, two chartered accountants, agree to carry on practice in common at the office of A
under the name “A and B” for a period of seven years. The terms of agreement entered into
between them provide that B should manage the office and supervise the clerical work and
that he should draw a fixed allowance of Rs2000 pm in lieu of profits. It is further agreed that
losses, if any, shall be borne by A alone, and that after seven years A would be entitled to the
office and all the other equipments, and B would not have any right, or claim, in respect of
them. Are A and B partners?

MODI’S, where success follows you. -1

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CPT Sec. B Mercantile Law

6. A is the sole proprietor of a firm. He admits B as a partner on the following terms: 1. B is not
to bring any capital, 2. B is not to be responsible for any loss, 3. B is to receive Rs 10,000 pa
in lieu of profits, 4. B is not to enter any contracts on behalf of the firm. Discuss the legal
position of B.

7. M, A clerk in K’s business, entered into a verbal agreement with K for a share of profit and
loss in the proportion of one-sixth to M and five-sixth to K. It was further agreed that the
building in which the business was carried on should remain the property of K. M alleges that
he is a partner and claims dissolution of the firm and an account of assets. K denies the
partnership, and alleges that M is only a clerk. Decide.

8. A, B, and C started a cloth business in Chandni Chowk on 1 Jan 2003, for a period of five
years. The business resulted in a loss of Rs10000 in the first year, Rs 15000 in the second year
and Rs 18000 in the third year. B and C wish to dissolve the firm while A wants to continue
the business. Advise B and C.

9. A and B form a trading partnership for five years. After two years A is convicted of traveling
on the railway without a ticket. A file a suit for the dissolution of the firm on the ground of his
own misconduct. Will he succeed? Will your answer be different if B files the suit on the
ground of A’s misconduct?

MODI’S, where success follows you. -2

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