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 is created through: \[ \text{a lawful agreement between partners} \] which may be written, oral, express or implied.

Answer 1

The Correct Option is B

According to the: \[ \text{Indian Partnership Act, 1932} \] partnership arises from: \[ \text{an agreement between persons} \] who agree to share profits of a business carried on by all or any one of them acting for all. The agreement may be:
• Express
• Implied
• Written
• Oral Even in the absence of a written contract, the mutual rights and duties of partners are governed by: \[ \text{a legally enforceable agreement} \] Thus, partnership is based on: \[ \text{contractual relationship} \] and not merely on trust or informal understanding. Option analysis:
• Option (A): Incorrect because partnership requires mutual agreement among all partners
• Option (B): Correct
• Option (C): Incorrect because legal enforceability is essential
• Option (D): Incorrect because intention to create legal relations is necessary Therefore: \[ \boxed{\text{(B)}} \]