ALLAMA IQBAL OPEN UNIVERSITY
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Semester Autumn 2024
Assignment No :2
Q.1 What is a partnership? Explain in detail the rights and duties of
partners in a partnership agreement under the Partnership Act 1932.
Ans: Partnership & Rights/Duties of Partners (Partnership Act 1932)
1. What is a Partnership?
A partnership is a business agreement where two or more people share
profits and losses of a business.
Definition (Sec 4): “Partnership is the relation between persons who have
agreed to share the profits of a business carried on by all or any of them
acting for all.”
Example: A, B, and C start a business and agree to share profits and losses.
2. Rights of Partners
1. Right to Participate – Every partner can take part in business (Sec 12(a)).
2. Right to Share Profits – If not specified, profits are shared equally (Sec 13(b)).
3. Right to Access Accounts – Partners can check financial records (Sec 12(d)).
4. Right to Indemnification – Reimbursement for business expenses (Sec 13€).
5. Right to Prevent New Partner – No new partner without consent (Sec 31).
6. Right to Retire – A partner can retire as per the agreement (Sec 32).
3. Duties of Partners
1. Duty to Work Honestly – Partners must act in good faith (Sec 9).
2. Duty to Share Losses – Losses must be shared like profits (Sec 13(b)).
3. Duty to Maintain Accounts – Financial transparency is required (Sec 14).
4. Duty to Avoid Conflict – A partner cannot run a competing business (Sec 16).
5. Duty to Inform – Important business matters must be shared (Sec 9).
Q.2 Explain in detail the modes of dissolution of partnership under the
Partnership Act 1932. Also, list down the various types of partners.
Ans:Dissolution of Partnership & Types of Partners (Partnership Act
1932)
1. Modes of Dissolution of Partnership
1. By Agreement (Sec 40) – Mutual consent or as per the deed.
2. Compulsory Dissolution (Sec 41) – Due to insolvency or illegal business.
3. By Notice (Sec 43) – A partner in a partnership at will can dissolve it by written notice.
4. By Court Order (Sec 44) – Due to insanity, misconduct, breach, or continuous losses.
5. Automatic Dissolution – By death of a partner or completion of a specific task.
2. Types of Partners
1. Active Partner – Manages business activities.
2. Sleeping Partner – Invests but does not participate.
3. Nominal Partner – Lends name but has no real role.
4. Partner by Estoppel – Acts like a partner but isn’t officially one.
5. Partner in Profits Only – Shares profits but not losses.
6. Minor Partner – A minor with profit rights but no liability.
Q.3 Explain in detail the key points of following concepts under the
Negotiable Instruments Act 1881:
i. Promissory note
ii. Bill of exchange
iii. Endorsement
iv. Holder in Due Course
Ans: Key Concepts Under the Negotiable Instruments Act 1881
1. Promissory Note (Sec 4)
A written promise by one party to pay a specific amount to another at a
fixed time.
Must be in writing, signed, and unconditional.
Example: A promises to pay B PKR 50,000 after 3 months.
2. Bill of Exchange (Sec 5)
A written order by one party (drawer) directing another (drawee) to pay a
third party (payee).
Involves three parties: Drawer, Drawee, Payee.
Example: A orders B to pay C PKR 100,000 on a set date.
3. Endorsement (Sec 15)
Signing on a negotiable instrument to transfer its ownership.
Types: Blank, Special, Restrictive, Conditional.
Example: A signs the back of a cheque and gives it to C.
4. Holder in Due Course (Sec 9)
A person who receives a negotiable instrument for value, in good faith,
and before maturity.
Gets special rights, even if the instrument has defects.
Example: B buys a valid promissory note from A before the due date.
Q.4 Define and distinguish between condition and warranty under the
Sale of Goods Act 1930. Under what circumstances a breach of condition
is to be treated as breach of warranty?
Ans : Condition vs. Warranty (Sale of Goods Act 1930)
1. Definition
Condition (Sec 12(2)) – A fundamental term essential to the contract.
Breach → Rejection of goods & refund.
Warranty (Sec 12(3)) – A secondary term. Breach → Claim for damages,
but goods must be accepted.
2. Differences
3. When is a Breach of Condition Treated as a Warranty? (Sec 13)
If the buyer accepts the goods despite the defect.
If the condition is minor and does not affect the contract’s purpose.
If the buyer chooses to claim damages instead of rejecting the goods.
The Sale of Goods Act 1930 ensures fair trade by defining conditions and
warranties clearly.
Q.5 Explain in detail the rights of the workers as per the Factories Act
1934 and the Workmen Compensation Act 1923.
Ans:Workers’ Rights Under the Factories Act 1934 & Workmen Compensation Act
1923
1. Rights Under the Factories Act 1934
Health & Safety: Clean environment, safe machinery, drinking water (Sec 13-26).
Working Hours: Max 48 hours/week, overtime pay (Sec 34-35).
Welfare: Restrooms, first aid, canteens (Sec 42-50).
Prohibition of Child Labor: Minimum working age 14 years (Sec 50).
2. Rights Under the Workmen Compensation Act 1923
Compensation for Injuries: Employer must pay for workplace injuries.
Death Benefits: Compensation to worker’s family if injury leads to death.
No-Fault Liability: Worker gets compensation regardless of employer’s negligence.
The laws ensure worker safety, fair wages, and compensation for workplace injuries.