The correct answer is Option (3) → Free transfer of share
A partnership rests on mutual trust and mutual agency, so a partner cannot transfer his share to an outsider without the consent of all the other partners. Free transferability of shares is a feature of a company, not of a partnership.
Option (1) Existence of Business — A feature of a partnership firm. The agreement must be to carry on a business.
Option (2) Sharing of profits — A feature of a partnership firm. The partners agree to share the profits and losses of the business.
Option (4) Unlimited liability — A feature of a partnership firm. A partner's private assets can be used to pay the firm's debts.
NCERT (2026-27 edition):
Nature of Partnership – “… 3. Business: The agreement should be to carry on some business. Mere co-ownership of a property does not amount to partnership.” NCERT (2026-27 edition):
Nature of Partnership – “… 5. Sharing of Profit: Another important element of partnership is that, the agreement between partners must be to share profits and losses of a business.” NCERT (2026-27 edition):
Nature of Partnership – “… 6. Liability of Partners: Each partner is liable jointly with all the other partners and also severally to the third party for all the acts of the firm done while he is a partner. Not only that the liability of a partner for acts of the firm is also unlimited. This implies that his private assets can also be used for paying off the firm’s debts.” NCERT (2026-27 edition):
Features of a Company – “… Transferability of Shares: The shares of a public limited company are freely transferable. The permission of the company or the consent of any member of the company is not necessary for the transfer of shares. But the Articles of the company can prescribe the manner in which the transfer of shares will be made.” |
