A and B, who work in partnership, deal in purchase and sale of cloth. B starts cloth manufacturing business individually. A files a suit against B for sharing of profit of cloth manufacturing business with hi, Will he succeed?

A partner can carry on business which is of the same nature as and competing with that of the firm. Hence, A will not succeed

No worries! We‘ve got your back. Try BYJU‘S free classes today!

A can also separately start cloth manufacturing business and he can earn the profit. Hence, he cannot recover

No worries! We‘ve got your back. Try BYJU‘S free classes today!

A partner shall not carry on business which is of the same nature as and competing with that of the firm, he shall account for the same and pay all such profits to the firm. cloth manufacturing is different activity and not similar to purchase and sale of cloth. Hence, A will not succeed

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

None of the above

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C A partner shall not carry on business which is of the same nature as and competing with that of the firm, he shall account for the same and pay all such profits to the firm. cloth manufacturing is different activity and not similar to purchase and sale of cloth. Hence, A will not succeed
A partner in a Partnership agreement of a firm can make secret profits without the consent of other partners only from some other business and not from the business of the partnership firm. Even the business should not compete with the business of the partnership firm. If the partner wants to carry on such a business then they can do so with the consent of all other partners.

Suggest Corrections

Similar questions

Q. A and B jointly invest Rs 2100 and Rs 3100 in a firm. A is an active partner, hence he receives 25% of the profit separately. If their business yields Rs 1040 as profit, what will be the profit share for each of them ?

Mr.Peter is planning to start a clothing store, in a shopping mall. He will be hiring 4 salesmen, 2 tailors, and 1 designer for the store. Peter got a chance to join his friend and be a partner in a clothing firm but he chose not to.
The above-mentioned passage has a set of characteristics in starting a business. Choose the correct order.

Q. Kushagr owns a textile business. He also overlooks the functioning of the cloth firm. In this case, Kushagr will be regarded as .

Q. X and Y are partners. They decided to dissolve their firm. After dissolution they sold the goodwill of firm to W. State the legal position of the following acts:
Case (a): Can X or Y carry on a business competing with that of W?
Case (b): Can X or Y advertise: such business?
Case (C): Can X or Y .use the firm name if there. is no agreement l between .them and LIP?
Case (d): an X or Y represent himself as carrying on firms business it there is no agreement between them and W?
Case (e) Can X or Y solicit the business from the customers of dissolved firm if there is no agreement between them and Vi?
Case (f): Can X or Y make an agreement with W that either of them will not carry on any business similar to that of a firm within a specified period or within specified limits?

Q. 'A', 'B', 'C', 'D' and 'V are partners in partnership firm. The firm has different types of partners. Mr. A has contributed capital and participates in the management of firm. He shares profits and losses and is liable to an unlimited extent to the creditors of the firm.
Mr. B has contributed capital and shares its profits and losses. He also has unlimited liability but he does not take part in day to day activities of business. Association of Mr. C is not known to the general public but in all other respects he is like an active partner. Mr. D has allowed the firm to use his name as he enjoys good reputation among clients but he does not either contribute capital or take part in the management.
Master 'E', 15 years of age is entitled to the benefits of partnership with mutual consent of all their members. He is not eligible to take part in management of firm and shares only profits and not losses of the firm.
(i) How many partners do the firm has?
(ii) Who is the active partner and what is the nature of his liability in the firm?
(iii) Who is the sleeping partner in the firm and what is the nature of his liability?
(iv) What kind of partner is Mr.0 and what kind of liability does he have in the firm?
(v) How does the partnership relationship of Mr. C differs from Mr. D ? How do they differ in their liability?
(vi) Is Mast. E a legal partner? Can be held liable for the liability of the firm?

Join BYJU'S Learning Program