Question

Select the essential features of partnership from the following:
(A) Partnership is the result of an agreement between partners.
(B) Co-ownership of a property between people amounts to partnership.
(C) Sharing of profits and losses of a business.
(D) Each partner carrying on the business is the principal as well as the agent for all the other partners.
Choose the correct answer from the options given below:

• A. (A), (B) and (C) only
• B. (A), (B) and (D) only
• C. (A), (B), (C) and (D)
• D. (A), (C) and (D) only

Hint:

Joint ownership of property alone does not create a partnership. Agreement, profit sharing and mutual agency do.

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
Section 4 of the Indian Partnership Act, 1932 defines partnership as the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.

Step 2: Essential features:
1. There must be an agreement.
2. The agreement is to share profits (and losses) of a business.
3. The business is carried on by all or any of them acting for all, which is mutual agency.

Step 3: Check statement (A).:
Partnership arises from an agreement, not from status. So (A) is an essential feature.

Step 4: Check statement (B).:
The Act says joint ownership of property does not by itself create a partnership. Co-owners may not even run a business. So (B) is NOT a feature.

Step 5: Check statement (C).:
Sharing profits is at the heart of the definition. So (C) is an essential feature.

Step 6: Check statement (D).:
Each partner is an agent of the others and of the firm, and also a principal. This is mutual agency. So (D) is an essential feature.

Final Answer:
Only A, C and D are essential features. Option (4). \[ \boxed{\text{(A), (C) and (D) only}} \]