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What is the main purpose of a non‑competition clause in the partnership deed?

Answer and explanation

Correct answer: To prevent a partner from carrying on a similar competing business

The non‑competition clause is meant to protect the firm's goodwill, customer base and market position by preventing a partner from engaging in a similar competing business. It directly restricts competing activity. Option B (non‑solicitation) is related but different — it bars soliciting the firm's customers, whereas non‑competition bars starting or running a competing business. Options C and D describe other issues: C concerns misuse of firm assets/personal gain, D is irrelevant because partners share profits rather than take a salary in normal partnership arrangements. Exam tip: clearly distinguish non‑competition from non‑solicitation and from clauses against misappropriation; in answers, link the clause to protection of goodwill/competition.

Related tags

Partnership DeedNon-CompetitionGoodwillPartnership AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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