Analyzing Key Partnership Statements

The question asks us to identify which statements regarding partnership law are false. Let's analyze each statement based on general principles of partnership, commonly found in partnership acts.

Statement A: Partners are not bound to carry on the business of the firm to the greatest common advantage

This statement is generally false. A fundamental duty of partners is to carry on the business of the partnership firm to the greatest common advantage. This means partners must act in the best interest of the firm and all partners collectively, not just their own individual benefit. Section 9 of the Indian Partnership Act, 1932, for instance, explicitly states this duty.

Statement B: Where a partner is entitled to interest on capital subscribed by him, such interest shall be payable whether or not there are profits

This statement is generally false. Interest on a partner's capital is typically payable only out of the profits of the partnership firm. The partnership agreement can change this rule, but the general principle is that capital earns interest only when the business is profitable. Paying interest on capital out of the firm's assets even when there are no profits would reduce the capital itself, which is usually not intended.

Statement C: An outgoing partner has a right to claim a share in the profits of the firm till his account is finally settled

This statement is generally true. When a partner ceases to be a member of the partnership firm but their account is not yet settled, they (or their estate) have the right to choose between receiving interest at a certain rate (e.g., six percent per annum) on the amount due to them or such share of the profits earned since they ceased to be a partner as may be attributable to the use of their share of the property of the firm. This right continues until the final settlement of accounts.

Statement D: A partner may be expelled from the firm only with the consent of all other partners

This statement is generally false. The expulsion of a partner is a serious matter and is usually governed by the partnership agreement. A partner can be expelled from the firm if the power to do so is conferred by the partnership agreement and is exercised in good faith and for the benefit of the partnership firm as a whole. The agreement may allow expulsion by a majority of partners, not necessarily requiring the consent of *all* other partners. Requiring unanimous consent for expulsion would make it extremely difficult, if not impossible, to remove a partner even for valid reasons.

Summary of False Statements

Based on the analysis above, the statements that are false are:

• Statement A: Partners are not bound to carry on the business of the firm to the greatest common advantage.
• Statement B: Where a partner is entitled to interest on capital subscribed by him, such interest shall be payable whether or not there are profits.
• Statement D: A partner may be expelled from the firm only with the consent of all other partners.

Statement C is true.

Therefore, the false statements are A, B, and D.

Revision Table: Partnership Statements Analysis

Additional Information: Key Partnership Concepts

Understanding the basic concepts of partnership law is crucial for analyzing statements like these. Here are a few related points:

• Mutual Agency: In a partnership, every partner is an agent of the firm and also of the other partners. This means the act of one partner done in the ordinary course of business binds the firm and the other partners.
• Profit and Loss Sharing: Unless the partnership agreement specifies otherwise, partners share profits and losses equally. The agreement can, however, define different ratios.
• Dissolution of Firm: A partnership firm can be dissolved for various reasons, including the death, insolvency, or retirement of a partner (unless the agreement provides for continuation), expiry of the term of the partnership, completion of the venture, or by agreement. A partner can also apply to the court for dissolution under certain circumstances.
• Duties of Partners: Besides working for common advantage, partners have other duties such as rendering true accounts and full information, indemnifying the firm for loss caused by willful neglect, and accounting for private profits derived from firm transactions or property.