CAF-4 · Chapter 12 · Question 9 of 10
A partner commits a fraud in the ordinary course of the firm's business, resulting in a severe loss to a client. Who must ultimately bear the cost of this loss internally among the partners?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The partner who committed the fraud must indemnify the firm for the loss caused to it by his fraud.
Explanation
It is a mandatory duty under Section 10 that every partner shall indemnify the firm for any loss caused to it by his fraud in the conduct of the business.
More Relations of partners to one another MCQs
- Q1Which of the following is considered a 'mandatory' general duty of a partner that CANNOT be altered by an agreement among the partners?
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- Q4What is the general legal rule regarding a partner's entitlement to receive interest on the capital they have invested in the firm?
- Q5Tom secretly buys an item of equipment for Rs. 18,000 and then sells it to his own partnership firm for Rs. 30,000 without revealing he…