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A firm constituted for a fixed term of five years goes on carrying on business after the five years expire, without any fresh agreement. Under section 17(b) of the Indian Partnership Act, 1932, how…

Question and options

A firm constituted for a fixed term of five years goes on carrying on business after the five years expire, without any fresh agreement. Under section 17(b) of the Indian Partnership Act, 1932, how are the mutual rights and duties of the partners determined?

  1. They become those of a particular partnership for one venture

  2. They end, and the partners may act only to wind up the firm

  3. They stay as before for a further fixed term of five years

  4. They stay as before, so far as consistent with a partnership at will

Answer and explanation

Correct answer: D - They stay as before, so far as consistent with a partnership at will

Section 17(b) of the Indian Partnership Act, 1932 provides that where a firm constituted for a fixed term continues after the term expires, the mutual rights and duties of the partners remain the same as before, so far as consistent with the incidents of a partnership at will, subject to contract. There is no automatic renewal for a fresh term of the same length. Nor is the firm treated as dissolved, since the partners carry on the business.

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