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If the deed says a partner will not carry on a separate business without consent, what does it relate to?

Answer and explanation

Correct answer: Partner's conduct and loyalty

The governing concept is a partner’s duty of loyalty and the prevention of conflicts of interest. A clause requiring consent before a partner carries on a separate business regulates conduct outside the firm. An independent business might compete with the partnership, divert customers or business opportunities, misuse confidential information, or reduce the partner’s attention to the firm. Requiring prior consent protects the collective interest and makes the partner’s obligation clear. It does not describe a banking record, a packing procedure or a sales discount. Those matters belong to different operational or accounting areas and do not explain why the deed restricts outside business activity. Hence option A is the only suitable answer.

Related tags

Partner ConductLoyaltyConflict Of InterestPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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