Following differences have arisen among P, Q and R. State who is correct in each case: (a) P used Rs. 20,000 belonging to the firm and made a profit of Rs. 5,000. Q and R want the amount to be given to the firm? (b) Q used Rs. 5,000 belonging to the firm and suffered a loss of Rs. 1000. He wants the firm to bear the loss? (c) P and Q want to purchase goods from A Ltd., R does not agree? (d) Q and R want to admit C as partner, P does not agree? (e) R had given loan of Rs. 1,00,000 to firm and demands interest @ 10% p.a. P and Q do not want to pay the interest.


(a) P is bound to pay Rs. 20,000 together with profit of Rs. 5,000 to the firm because this amount belongs to the firm.
Explanation: As per Principal and Agent relationship, P is principal as well as agent to the firm and to Q and R. As per this rule, any profit earned by an agent (P) by using the firm’s property is attributable to the firm.

(b) Q is liable to pay Rs. 5,000 to the firm. As per the Partnership Act, 1932, every partner of a partnership firm is liable to the firm for any loss caused by his/her wellful negligence.
Explanation: Here Q is solely responsible for the loss of Rs. 1,000 because he used the property of the firm and also represented himself as a principal rather than an agent to the other partners and to the firm.

(c) P and Q may buy goods from A Ltd.
Explanation: As per Partnership Act, 1932, a partner has a right to buy and sell goods without consulting the other partners unless a Public Notice has been given by the partnership firm to restrict the partners to buy and sell.

(d) C will not be admitted because one of the partners P has not agreed to admit C.

(e) P, Q and R are not correct
Explanation: As per Partnership Act, a new partner cannot be admitted into a firm unless all the existing partners agree on the same decision. In other words, a new partner can be admitted in a partnership firm with the consent of all the existing partners.

Leave a Reply