Which of the following statement is incorrect?

The method of settlement of dispute among the partner cannot be part of the partnership deed.

The correct answer is option 4- The method of settlement of dispute among the partner cannot be part of the partnership deed.

The method of settlement of dispute among the partner cannot be part of the partnership deed is the incorrect statement as it can be the part of partnership deed.

Partnership comes into existence as a result of agreement among the partners. The Partnership Deed usually contains the following details: Names and Addresses of the firm and its main business; Names and Addresses of all partners; Amount of capital to be contributed by each partner; The accounting period of the firm; The date of commencement of partnership; Rules regarding operation of Bank Accounts; Profit and loss sharing ratio; Rate of interest on capital, loan, drawings, etc; Mode of auditor’s appointment, if any; Salaries, commission, etc, if payable to any partner; The rights, duties and liabilities of each partner; Treatment of loss arising out of insolvency of one or more partners; Settlement of accounts on dissolution of the firm; Method of settlement of disputes among the partners; Rules to be followed in case of admission, retirement, death of a partner; Any other matter relating to the conduct of business.

OTHER OPTIONS

• Valid partnership can be formulated even without a written agreement between the partners.  IT IS TRUE. Partnership is the result of an agreement between two or more persons to do business and share its profits and losses. The agreement becomes the basis of relationship between the partners. It is not necessary that such agreement is in written form. An oral agreement is equally valid. But in order to avoid disputes, it is preferred that the partners have a written agreement.

• Each partner will share profit in same proportion as other in case partnership deed is not there. IT IS TRUE. In the absence of a specified profit sharing ratio in the partnership deed, the profits and losses of the firm will be divided equally among the partners, regardless of their individual capital contributions.

• Maximum number of partners as prescribed by Central Government can be 50. IT IS TRUE. By virtue of Section 464 of the Companies Act 2013, the Central Government is empowered to prescribe maximum number of partners in a firm but the number of partners can not be more than 100. The Central government has prescribed the maximum number of partners in a firm to be 50.