Accountancy Part AAccounting for Partnership

Which of the following is not always an essential feature of partners…

Which of the following is not always an essential feature of partnership?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Liability of partners is always unlimited.

The essential features of a partnership come from its definition: at least two persons, an agreement, a lawful business, sharing of profits and losses and mutual agency. Without any one of them there is no partnership. Unlimited liability is the usual position of a partner, but it is a consequence of the relationship and is not always present: a minor admitted to the benefits of partnership, for example, is liable only to the extent of his share in the firm.

Option (1) Sharing of profits and losses — An essential feature. The agreement must be to share the profits (and so the losses) of a business.

Option (2) Relationship of mutual agency among the partners. — An essential feature. Each partner is an agent of the others and binds them by his acts done for the business.

Option (4) Agreement to carry lawful business — An essential feature. Partnership arises only from an agreement, and that agreement must be to carry on a lawful business.

NCERT (2026-27 edition):
Terms Introduced in the Chapter – “… The essential features of partnership are : (i) To form a partnership, there must be at least two persons; (ii) It is created by an agreement; (iii) The agreement should be for carrying on some legal business; (iv) sharing of profits and losses; and (v) relationship of mutual agency among the partners.”