Business StudiesCBSE Class 11 · Forms of Business Organisation

Partnership Class 11 Business Studies: Types of Partners, Minor, Deed, Registration and Profit Sharing

Updated 17 October 2026 · Fact-checked

A partnership under the Indian Partnership Act, 1932 is a relationship among persons who agree to share the profits of a business run by all or any of them acting for all. It has 2 to 50 members, unlimited and joint liability and mutual agency. Partners may be active, sleeping, secret, nominal, by estoppel or by holding out; a minor can only be admitted to the benefits; registration is optional but an unregistered firm cannot sue.

Remember the seven key features: agreement, 2 to 50 members, unlimited liability, mutual agency, shared profits, limited continuity, and optional registration.

Illustration drawn for QuestionBuddy.

Understand Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11)

Meaning. Under the Indian Partnership Act, 1932 a partnership is a relationship among people who agree to share the profits of a business run by all of them or by any one or more of them acting for all.

Features. Formation by agreement (oral or written); liability unlimited and joint (partners are liable jointly and individually for the firm's debts); risk shared by all; decisions by mutual consent; limited continuity (death, retirement or insolvency of a partner can end it unless the others agree to continue); membership minimum 2 and maximum 50; mutual agency (each partner is both an owner and an agent, so acts of one bind all).

Merits. Easy formation and closure, balanced decisions, more funds than a sole proprietor, sharing of risk, secrecy. Limitations. Unlimited liability, limited resources, conflicts, lack of continuity, little public confidence.

Types of partnership. By duration: partnership at will (no fixed period; ended by notice) and particular partnership (for a venture or period). By liability: general (all partners unlimited and joint) and limited (at least one partner with unlimited liability; others limited and without management rights). A limited liability partnership is governed by the LLP Act, 2008.

Types of partners.

Partner	Capital	Management	Share in profit	Liability
Active	Contributes	Takes part	Shares	Unlimited
Sleeping	Contributes	Does not take part	Shares	Unlimited
Secret	Contributes	Takes part, unknown to outsiders	Shares	Unlimited
Nominal	No	No	No	Unlimited (lends name)
By estoppel	No	No	No	Unlimited to third parties
By holding out	No	No	No	Unlimited to third parties

A partner by estoppel represents himself as a partner by his words or conduct; a partner by holding out is declared a partner by the firm and does not deny it.

Minor as a partner. A minor cannot be a full partner but may be admitted to the benefits of the firm with the consent of all partners. He shares profits, takes no part in management, and his liability is limited to his share in capital and profits. On attaining majority he must decide within six months whether to become a partner.

Registration. With the Registrar of Firms; optional. An unregistered firm cannot be sued by a partner against the firm or other partners, cannot sue third parties, and cannot sue a partner. Third parties can still sue the firm. The Registrar enters the firm in the register and issues a certificate of registration.

Partnership deed. A written agreement, preferably stamped: name of firm, business and place, duration, capital of each partner, profit-sharing ratio, interest on capital and drawings, salaries and commissions, rules for admission, retirement and expulsion, settlement of accounts on dissolution, settlement of disputes, accounts and audit.

Profit division. Profit available = profit - interest on capital - salaries (as the deed provides); the balance is divided in the profit-sharing ratio.

Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11): key facts

Membership: minimum 2 partners
maximum 50 partners
agreement oral or written; Governed by the Indian Partnership Act, 1932.
Liability: unlimited
joint and individual
mutual agency, each partner is owner and agent; Limited partner: limited, no management.
Profit division: profit - interest on capital - salaries = balance
balance divided in the profit-sharing ratio
partner total = interest + salary + share; As provided by the deed.
Registration: optional
with the Registrar of Firms
unregistered firm cannot sue; Third parties can sue the firm.

How to answer Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11) questions

For partnership questions, identify the partner type or the rule, then apply it.

1For a partner type test three facts: capital, management and profit share.
2For liability remember unlimited and joint, except a minor and a limited partner.
3For a profit numerical list the deed terms: interest on capital, salaries, then the ratio.
4Compute interest = capital x rate, deduct all appropriations, divide the balance by the ratio.
5Check that the partners' totals add up to the profit.

Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11) in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Two friends open a print shop

Suppose Asha and Bilal start a print shop, agree orally to share profits 3:2 and later put the agreement in writing.

Is an oral agreement enough, and what does the written deed add?

Try it first, then show the solutionSolution

A partnership is formed by an agreement, oral or written.
A written, stamped deed records the ratio, capital, salaries and dispute rules, which prevents later conflicts.

Answer: Yes, an oral agreement forms a partnership; the deed records the terms in writing.

Memory hook: Agreement forms it; the deed proves it.

Tricks to remember Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11)

Short memory aids. Say each one aloud once, then use it on a question the same day.

Two to fifty
Minimum 2, maximum 50 members.
Use it when: Membership.
Money, Management, Share
Ask whether the partner gives money, manages, and shares profit.
Use it when: Types of partners.
Optional but costly to skip
Registration is optional, but an unregistered firm cannot sue.
Use it when: Registration questions.

Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11): solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Maximum partners · 1 mark · MCQBoard level

What is the maximum number of partners in an ordinary partnership firm?
(a) 10
(b) 20
(c) 50
(d) 100

Try it first, then show the solutionSolution

The maximum is 50, as prescribed under the Companies Act, 2013 and its rules.

Answer: (c) 50

Example 2: Nominal partner and estoppel · 3 marks · Short answerBoard level

Distinguish between a nominal partner and a partner by estoppel. (3 marks)

Try it first, then show the solutionSolution

A nominal partner lends his name to the firm; he does not contribute capital, take part in management or share profits.
A partner by estoppel represents himself as a partner by his own words or conduct; he too neither contributes nor manages nor shares.
Both are liable to third parties; the difference is in how the position arises, by lending the name or by representing oneself as a partner.

Answer: Lending the name versus representing oneself as a partner; both liable to third parties.

Example 3: Profit distribution · 4 marks · Short answerHarder board level

A, B and C have capitals of 2,00,000, 1,00,000 and 1,00,000. The deed provides interest on capital at 5% a year and profit sharing in the ratio 3:1:1. The profit is 1,20,000. Find each partner's total share. (4 marks)

Try it first, then show the solutionSolution

Interest: A 2,00,000 x 5% = 10,000; B 5,000; C 5,000; total 20,000.
Balance = 1,20,000 - 20,000 = 1,00,000, divided 3:1:1: A 60,000, B 20,000, C 20,000.
Totals: A 10,000 + 60,000 = 70,000; B 5,000 + 20,000 = 25,000; C 5,000 + 20,000 = 25,000.
Check: 70,000 + 25,000 + 25,000 = 1,20,000.

Answer: A 70,000; B 25,000; C 25,000

Example 4: Unregistered firm and liability · 5 marks · Case-basedHOTS / competency

Case: Rahul and Imran run an unregistered firm. The firm owes a supplier 5,00,000 but its assets are worth 3,00,000. A customer owes the firm 80,000 and refuses to pay. Rahul has personal assets of 4,00,000. (5 marks)
(i) What is the shortfall and who can be asked to pay it? (2)
(ii) Can the firm sue the customer? Explain. (2)
(iii) Name the feature of liability involved. (1)

Try it first, then show the solutionSolution

(i) Shortfall = 5,00,000 - 3,00,000 = 2,00,000. The supplier can recover it from the personal assets of any partner, including Rahul, because liability is unlimited and joint.
(ii) An unregistered firm cannot file a suit against third parties, so it cannot sue the customer. Third parties, however, can still sue the firm.
(iii) Unlimited and joint liability.

Answer: (i) 2,00,000 from personal assets of any partner. (ii) No, an unregistered firm cannot sue. (iii) Unlimited and joint.

Example 5: A minor in the firm · 4 marks · Short answerHarder board level

Aditya, aged 16, is admitted to the benefits of a firm with the consent of all partners and has 1,00,000 as his capital in the firm. The firm suffers a loss of 6,00,000 beyond its assets. Explain his position, the extent of his liability and what he must do on attaining majority. (4 marks)

Try it first, then show the solutionSolution

A minor cannot be a full partner because he cannot enter a contract, but he can be admitted to the benefits with the consent of all.
He shares profits but cannot take part in management.
His liability is limited to his share in the capital and profits of the firm, here his 1,00,000 in the firm, and his personal property is not at risk.
On attaining majority he must decide within six months whether to become a partner.

Answer: Limited to his share of capital and profits; decide within six months of majority.

Where students lose marks in Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11)

The slips examiners see most often, and what to write instead.

Mistake: Giving a minor unlimited liability
Applying the rule for full partners.
Wrong working
A minor partner is liable to the full extent of the firm's debts
Right working
His liability is limited to his share in capital and profits
Do this: Minor: limited.
Usually costs: 1 to 2 marks
Mistake: Forgetting interest on capital before dividing the balance
Dividing the whole profit in the ratio.
Wrong working
1,20,000 divided 3:1:1 gives A 72,000
Right working
Deduct interest of 20,000 first; then divide 1,00,000 to give A 60,000 plus 10,000 interest
Do this: Follow the order in the deed.
Usually costs: 1 to 2 marks
Mistake: Saying registration is compulsory
Confusing with companies.
Wrong working
A partnership firm must be registered
Right working
Registration is optional, but an unregistered firm faces disabilities in suing
Do this: Optional, with consequences.
Usually costs: 1 mark

Exam tips

Give the Indian Partnership Act, 1932 in the definition.
Use a table for the types of partners with capital, management, profit share and liability.
In profit numericals show interest, salary and balance separately and verify the total.
Mention the six-month option of a minor on attaining majority.

Practice questions on Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11)

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
The minimum number of members in a partnership is
(a) 1
(b) 2
(c) 7
(d) 10
Hint
Agreement among persons.
Answer
(b) 2
Q2 · 1 mark · Assertion-reasonHarder board level
Assertion (A): The acts of one partner within the business bind the other partners.
Reason (R): Every partner is both an owner and an agent of the firm.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Mutual agency.
Answer
(a) Both A and R are true, and R is the correct explanation of A.
Q3 · 4 marks · Short answerHarder board level
Distinguish between a partnership at will and a particular partnership, and between a general and a limited partnership. (4 marks)
Hint
Duration and liability.
Answer
Partnership at will has no fixed period and ends by notice; a particular partnership is for a specific venture or period and ends when it is completed. In a general partnership all partners have unlimited and joint liability; in a limited partnership at least one partner has unlimited liability and the others have limited liability and no management rights.
Q4 · 5 marks · Short answerHarder board level
X and Y have capitals of 1,50,000 and 50,000. The deed gives interest on capital at 10% a year, a salary of 30,000 to X and equal profit sharing. The profit is 2,40,000. Find the total share of X and of Y. (5 marks)
Hint
Interest, salary, then the balance.
Answer
Interest: X 15,000, Y 5,000 (total 20,000). Salary to X: 30,000. Appropriations = 20,000 + 30,000 = 50,000. Balance = 2,40,000 - 50,000 = 1,90,000, shared equally: 95,000 each. X = 15,000 + 30,000 + 95,000 = 1,40,000. Y = 5,000 + 95,000 = 1,00,000. Check: 1,40,000 + 1,00,000 = 2,40,000.
Q5 · 5 marks · Case-basedHOTS / competency
Case: Priya and Quinn start a firm by an oral agreement. To impress a supplier, they introduce their friend Rina as a partner, though she invests nothing. Rina does not deny it. The firm defaults on 60,000 owed to the supplier. (5 marks)
(i) What kind of partner is Rina? (1)
(ii) Can the supplier recover from her? (2)
(iii) Is the oral partnership valid, and what two benefits does a written deed give? (2)
Hint
Declared by the firm and not denied.
Answer
(i) A partner by holding out, since the firm declared her a partner and she did not deny it. (ii) Yes; she is liable to third parties, so the supplier can recover from her. (iii) Yes, a partnership can be formed by an oral agreement. A written deed records the profit-sharing ratio and other terms clearly and helps settle disputes.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Which Act governs partnership?Show answer
The Indian Partnership Act, 1932.
2.Can a minor be a full partner?Show answer
No; he can be admitted to the benefits only.
3.Is registration of a firm compulsory?Show answer
No, it is optional.
4.Which partner takes part in management but is unknown to outsiders?Show answer
The secret partner.
5.What does mutual agency mean?Show answer
Each partner is both an owner and an agent of the firm.

Partnership: Features, Types of Partners, Minor, Deed and Registration with Profit-sharing Numericals (CBSE 11): frequently asked questions

What is a limited liability partnership?

A form governed by the LLP Act, 2008.

Does a sleeping partner have unlimited liability?

Yes, though he does not take part in management.

Can an unregistered firm be sued?

Yes, third parties can sue it.