Question

Which of the following options regarding proprietorship is wrong?

Options

• Basis of formation : No agreement

• Number of members : No maximum limit

• Management : By the Sole Proprietor

• Application of Law : The Contract Act

Answer 1

Number of members : No maximum limit

Explanation:

A proprietorship is a business owned and managed by a single person; by definition, it involves only one member. It does not have members beyond the sole proprietor. The basis of formation is the absence of agreement; management is by the sole proprietor; and the applicable law is the Contract Act. Hence, the statement that there is no maximum limit on members is incorrect, as there can only be one owner in a proprietorship.