Question

Assertion (A): Partnership may be conducted on the basis of written or oral agreement, and all partners should contribute capital in the firm.

Reason (R): It is necessary that a written agreement exists and the business may be conducted on by all or any of them acting for all.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

Both (A) and (R) are wrong.

Explanation:

A partnership can indeed be formed through a written or oral agreement, but it is not mandatory for all partners to contribute capital; some may contribute only skills or services. Also, a written agreement is not necessary for forming a partnership; an oral agreement is equally valid. Furthermore, the business may be conducted by all or any of the partners acting for all, but this part of (R) does not justify the incorrect requirement of a written agreement. Hence, both assertion and reason are incorrect.