Which of the following is not a feature of a partnership firm?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → Limited Liability

A partner’s liability is unlimited. Each partner is liable jointly with the others and also severally for the acts of the firm, so his private assets can be used to pay the firm’s debts. Limited liability belongs to a company, whose members risk only the amount unpaid on their shares.

Option (1) Two or more persons — A feature of a partnership firm. A partnership needs at least two persons, since one person cannot make an agreement with himself.
Option (2) Mutual Agency — A feature of a partnership firm. The business may be carried on by all the partners or any of them acting for all, so each partner is an agent of the others and binds them by his acts.
Option (3) Sharing Profits and Losses — A feature of a partnership firm. The agreement must be to share the profits and losses of the business.

NCERT (2026-27 edition):
Summary – “1. Definition of partnership and its essential features: Partnership is defined as “Relation between persons who have agreed to share the profits of a business carried on by all or any one of them acting for all”. 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.”

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.”