Which among the following is NOT true?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Mere co-ownership of a property can amount to partnership.
| Statement | Status | Rationale |
| Valid partnership can be formulated even without a written agreement between the partners. | TRUE | A partnership is created by an agreement, which can be oral or implied by conduct. A written agreement (Partnership Deed) is highly recommended but not legally mandatory for validity. |
| Each partner carrying on the business is the principal as well as the agent for all the other partners. | TRUE | This is the core concept of Mutual Agency, which is a defining test of a partnership. |
| Mere co-ownership of a property can amount to partnership. | NOT TRUE | Co-ownership of property (e.g., inheriting a building together) does not automatically constitute a partnership. A partnership requires an agreement to carry on a business with the intent of sharing profits. |
| Persons who have entered into partnership with one another are individually called 'partners' and collectively called 'firm'. | TRUE | This is the standard legal and conceptual definition of the relationship and the business entity. |