Where partners upon or in anticipation of the dissolution of the firm make an agreement that some or…
Section 54 of the Partnership Act allows partners, upon or in anticipation of dissolution, to agree not to carry on a similar business within a specified period or local…
Choose your answer
Where partners upon or in anticipation of the dissolution of the firm make an agreement that some or all of them will not carry on a business similar to that of the firm within a specified period or within specified local limits, such agreement is:
Answer and explanation
Correct answer A
Section 54 of the Partnership Act allows partners, upon or in anticipation of dissolution, to agree not to carry on a similar business within a specified period or local limits, and such an agreement is "Valid, if restrictions imposed are reasonable". The option calling it void ignores this statutory exception to section 27, and a reasonable restraint of this kind is enforceable, not merely voidable.
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