If the partnership deed says disputes will be settled by arbitration, what process does it show?

Correct answer: Dispute settlement through arbitration

The direct answer is option C: dispute settlement through arbitration. Arbitration is a formal alternative method in which the partners agree to place their disagreement before an independent arbitrator, who considers both sides and gives a decision according to the agreed rules. Step by step, the deed contains a dispute clause; a disagreement arises; the partners refer it to arbitration; and the arbitrator helps decide the matter without relying only on an ordinary court case. Option A, internal stock checking, concerns checking goods and inventory, not disagreements. Option B, tax assessment, is the government’s process of determining tax, not a partnership dispute process. Option C is correct because it exactly describes arbitration. Option D, bank reconciliation, means comparing the cash book with the bank statement. Memory cue: arbitration means an agreed outside decision-maker for a dispute.