Question

Which of the following most accurately explains the legal foundation governing the mutual rights and obligations of partners in a partnership firm, particularly in the absence of an express written contract?

• A. A formal offer made by one partner and accepted by others
• B. An agreement—express or implied—enforceable by law between all partners
• C. A mutual understanding based solely on trust and verbal communication
• D. An acceptance of business terms without the intention to create legal relations

Hint:

Partnership relations are governed by: \[ \mathrm{Lawful\ Agreement} \] which may be: \[ \mathrm{Express\ or\ Implied} \]

Answer 1

The Correct Option is B

Concept: The mutual rights and duties of partners are primarily governed by the partnership agreement. Under the Indian Partnership Act, 1932:
• The agreement may be express or implied.
• It must be enforceable by law.
• In the absence of a written agreement, implied agreements and provisions of the Act apply.

Step 1: Understand the legal basis of partnership relations.
Partnership is based on a lawful agreement between partners. The agreement may be: \[ \mathrm{Express\ or\ Implied} \] Thus: \[ \boxed{\mathrm{Agreement\ enforceable\ by\ law}} \]

Step 2: Analyze the remaining options.
Option (A) Partnership is not merely based on offer and acceptance. \[ \Rightarrow \mathrm{Incomplete} \] Option (C) Trust alone without legal enforceability is insufficient. \[ \Rightarrow \mathrm{Incorrect} \] Option (D) Legal intention is essential in partnership agreements. \[ \Rightarrow \mathrm{Incorrect} \]

Step 3: Identify the correct option.
Therefore, the legal foundation governing mutual rights and obligations is: \[ \boxed{\mathrm{Agreement\textemdash express\ or\ implied\textemdash enforceable\ by\ law}} \] Hence, the correct answer is: \[ \boxed{\mathrm{(B)}} \]