CHAPTER 17 PRACTICAL PROBLEMS

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PRACTICAL PROBLEMS

 (1)       Two brothers X (age 18 years), Y(age 17 years), decide to form a partnership. Can they do so?

Solution:          Section to which the given problem relates: Section 4.

Decision:         No.

Reason:           There must be at least two persons and such persons must be competent to contract. In the given case, Y is not competent to contract because he is a minor. Hence, there is only one person X who alone cannot form a. partnership.

(2)        Three brothers, X (age 19 years), Y (age 18 years) and Z (age 17 years), decide to form a partnership with a provision that Z will share the profits only

Solution:          Section to which given problem relates: Section 4.

Decision:         No.

Reason:           All the persons entering into partnership agreement must be competent to contract. Z is not competent to contract because he is a minor. It may be noted that no partnership can be formed with a minor partner. But after the formation of partnership, a minor can be admitted to the benefits of partnership with the consent of all of all other partners of the firm as per the provisions of Section 30 of the Act.

(3)        Ten major persons form an association to which each member contributes Rs. 10,000. The purpose is to produce medicines for free distribution to poor patients. Is there a valid partnership?

Solution:          Section to which the given problem relates: Section 4.

Decision:         No.

Reason:           There is no intention to carry on the business and to share the profits thereof.

(4)        Two manufacturing firms, each having twenty members, amalgamate their business. Can the firm enforce contracts entered into by the amalgamated firm?

Solution:          Section to .which the given problem relates: Section 11 the Companies Act, 1956. Decision:         No.

Reason:           The amalgamated firm is an illegal association because such firm consists of 40 persons, which exceeds the statutory limit of 20 persons.

(5)        Two banking firms, each having ten members, amalgamate their business. Can the firm enforce contracts entered into by the amalgamated firm?

Solution:          Section to which the given problem relates: Section 11 of the companies Act 195&. Decision:      No.

Reason:           The amalgamated firm is an illegal association because such a firm consists of 20 persons, which exceeds the statutory limit of 10 persons.

(6)        A Pakistani undivided family consisting of 11 major members and 2 minor members carries on a family banking business.

(a)        Is there anything wrong?

(b)        Can such members be called partners?

Solution: Part a:

Section to which the given problem relates: Section 11 of the Companies Act, 1956.

Decision:         No.

Reason:           The statutory limit of 10 persons does not apply to a joint family o

Part b:

Section to which the given problem relates: Section 5.

Decision:         No.

Reason:           The relation of partnership arises from contract and not from status, such members are called coparceners.

(7)        X, Y and Z agreed to share the profits and tosses and to carry on the business by all or anyone acting for all for mutual benefits and gain. The management and control was entrusted in X with power to restrict the right of Y and Z. Is there a valid partnership.

Solution:          Section to which the given problem relates: Section 4.

Decision:         Yes.

Reason:           All the essential elements of partnership exist under the partnership agreement.

(8)        X and Y agreed to share the profits of a business carried on by all or any of them acting for alt Later on, Z lent Rs* 1,00000 to the firm on the condition that he will take 25% share in profits« Can Z be regarded as a partner?

Solution:          Section to which given problem relates: Section 4 and 6.

Decision:         No

Reason:           Sharing of profit, which is a prima facie evidence, exists, but the mutual agency relationship among X, Y and Z, which is conclusive evidence, does not exist.

(9)        X,  a publisher agrees to publish at his own expense9 a book written by Y and to pay Y half of the net profits. Can X and Y be regarded as partners?

Solution:          Section to which the given problem relates: Section 4 to 6.

Decision:         No.

Reason:           Sharing of profit, which is a prima facie evidence, exists but mutual agency among X and Y, which is conclusive evidence, does not exist.

(10)      X, Y and Z are partners in an unregistered firm, X steals the property of the firm. Y field a suit against X. X resisted Y9s claim on the plea that the firm was not registered. Will Y succeed?

Solution:          Section to which the given problem relates: Section 69(1).

Decision:         Yes.

Reason:           Section 69(1) prohibits the institution of civil suit and not the criminal suit.

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