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Under the Indian Partnership Act, 1932, who is a partner on the facts stated?

Question and options

Under the Indian Partnership Act, 1932, who is a partner on the facts stated?

  1. A lender whose only interest in the business is repayment linked to its profits.

  2. A person who agrees to share profits in a business carried on by all the participants or by any of them acting for all.

  3. A joint owner whose only involvement is sharing returns from jointly held property.

  4. A former owner whose only interest is a profit share received as consideration for selling goodwill.

Answer and explanation

Correct answer: B - A person who agrees to share profits in a business carried on by all the participants or by any of them acting for all.

Section 4 requires an agreement to share the profits of a business carried on by all the participants or by any of them acting for all. The latter requirement is mutual agency. Under section 6, the parties' real relationship governs.

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