Which among the following is NOT true about the Partnership?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → If persons join hands for the purpose of some charitable activity it can be termed as partnership.

A partnership exists only where two or more persons agree to carry on a business and to share its profits. People who come together for a charitable activity have no business and no profit to share, so their group is not a partnership. The other three statements are true features of a partnership:

Option (1) 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. — A feature of a partnership. A creditor may recover the firm’s debt from all the partners together or from any one of them.

Option (2) Partnership is the result of an agreement between two or more persons to do business and share their profits and losses. — A feature of a partnership. The relationship arises from an agreement, not from status or birth.

Option (4) The minimum number of partners in a firm can be two. — A feature of a partnership. At least two persons are needed to form a 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. Though the definition contained in the Partnership Act describes partnership as relation between people who agree to share the profits of a business, the sharing of loss is implied. Thus, sharing of profits and losses is important. If some persons join hands for the purpose of some charitable activity, it will not be termed as partnership.”

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.”

NCERT (2026-27 edition):
Nature of Partnership – “… 1. Two or More Persons: In order to form partnership, there should be at least two persons coming together for a common goal. In other words, the minimum number of partners in a firm can be two. There is however, a limit on their maximum number. 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 partness in a firm to be 50.”