Question

Rakesh's father gifted him a cricket bat on his birthday. The cost of the bat was Rs. 800. Few months later, Rakesh sold it to Nishant, one of his school friends, for Rs. 850. He was very happy to earn a profit of Rs. 50. He was boosted by this transaction and after completing his studies, he formed a partnership business with his friend Nisltant trading in bats and other sports materials under the name M/s Rakesh Tinders. Rakesh and Nishant both act like an agent as well as principal of each other. Firm soon started earning good profits. Rakesh's father suggested them to spend some money on social responsibilities. They then decided to donate free sports goods to schools which were financially weak.
(a) Can the transaction between Rakesh and Nishant be termed as business transaction? Give reason. Nature and Purpose of Business
(b) Can the transaction between M/s Rakesh Traders and other persons be termed as business transactions? Give your reason.
(c) Which feature of partnership form of business is mentioned above?
(d) According to you which value motivated the partners to donate sports goods? Give any one suitable value.

Answer 1

(a) No. The transaction between Rakesh and Nishant cannot be termed as a business transaction since it is not done on a regular basis.

(b) Yes. The transaction between M/S Rakesh Traders and other persons can be termed as a business transaction since it involves supply of bats and other sports materials on a regular basis for the purpose of earning profit.

(c) The feature mentioned in above case is Principle-Agent relationship

(d) Value of Charity.