Joint Hindu Family Business & LLP vs. Partnership – Lecture Review

A comprehensive set of Q&A flashcards summarizing HUF meaning, merits, demerits, and comparison between LLP and traditional partnership structures.

What is a Joint Hindu Family Business (HUF)?

A business owned by members of a Joint Hindu Family, managed by the Karta under Hindu law.

Who is the 'Karta' in a HUF business?

The eldest male member who controls, manages, and can take all decisions for the family business.

Which two Hindu law schools govern Joint Hindu Families?

Mitakshara and Dayabhaga.

At birth, with equal rights alongside his father.

Under the Mitakshara system, when does a son obtain rights in ancestral property?

Only after the death of his father.

Under the Dayabhaga system, when does a son get rights in ancestral property?

State one merit of a HUF: related to formation.

Easy to start – no legal formalities are required; it exists by status.

How does the HUF form ensure business secrecy?

All key information remains confined to the Karta, limiting competitor access.

Why can a HUF business take prompt decisions?

The Karta alone decides; no need for consultation delays.

Explain the merit ‘direct relationship between effort and reward’ in a HUF.

Because the Karta controls profits, greater personal effort directly increases his reward.

What advantage does hereditary succession give a HUF?

It preserves family traditions and reputation across generations.

Name one financial demerit of a HUF business.

Limited resources, hindering large-scale expansion.

What is meant by the Karta’s ‘unlimited liability’?

If business debts exceed assets, the Karta’s personal property can be used to repay creditors.

How can dominance of the Karta become a demerit?

Absolute power may be misused, causing conflict and loss of family goodwill.

Why is limited managerial skill a problem in HUF?

One person (Karta) cannot possess all expertise needed for complex modern business.

Identify a non-financial demerit linked to family participation in HUF.

Lack of cooperation; members may focus on personal property over the joint business.

What key weakness of a traditional partnership is removed in an LLP?

Unlimited liability of partners; LLP limits liability to the amount invested.

Which act governs ordinary partnerships in India?

The Indian Partnership Act, 1932.

Which act governs Limited Liability Partnerships (LLP) in India?

The Limited Liability Partnership Act, 2008.

Is registration compulsory for an LLP or a traditional partnership?

Compulsory for LLP; optional for a traditional partnership.

Does an LLP have a separate legal entity and perpetual succession?

Yes; it continues regardless of partner entry or exit and can sue or be sued in its own name.

What suffix must be added to an LLP’s name?

The words "Limited Liability Partnership" or "LLP".

State the minimum and maximum number of partners in an LLP.

Minimum 2 partners; no maximum limit.

State the minimum and maximum number of partners in a traditional partnership.

Minimum 2 partners; maximum 50 partners.