X and Y, buy 50 bales of cotton agreeing to divide these between them. Decide whether X and Y are partners? Support your answer in light of Indian Partnership Act, 1932.

This question relate to the Indian Partnership Act, 1932. The issue involved in this problem is whether X & Y are partners or not? According to section 4 of the Act, "Partnership is the relation between person who have agreed to share the profits of a business carried on by all or any of them acting for all." Therefore, to constitute a partnership, the parties must have agreed to carry on a business and to share profits in common. "Profits" mean the excess of returns over advances, the excess of what is obtained over the cost of obtaining it. It follows that the sharing of profits is an essential ingredient of partnership. In present problem X and Y buy 50 bales of cotton agreeing to divide bales between them. So here the prima facie evidence of the existence of partnership i.e. sharing of profits is missing hence in view of Section 4 of the Indian Partnership Act, 1932, X and Y are not partners.