Which of the following statement is incorrect?

Let me examine each statement to identify the incorrect one:

Option 1: Valid partnership can be formulated even without a written agreement

This is correct. According to the Indian Partnership Act, 1932, a partnership can be created through oral agreement or even through conduct of partners. Written partnership deed is not mandatory for a valid partnership.

Option 2: Each partner will share profit in same proportion in absence of partnership deed

This is correct. As per Section 13 of the Indian Partnership Act, 1932, when there is no partnership deed or when the deed is silent on profit sharing ratio, all partners share profits and losses equally.

Option 3: Maximum number of partners can be 50

This is correct. The Central Government has prescribed the maximum limit of partners in a partnership firm as 50 (increased from earlier limits through amendments).

Option 4: The method of settlement of dispute cannot be part of partnership deed

This is incorrect. The partnership deed can include provisions for settlement of disputes among partners. In fact, dispute settlement clause is commonly included in partnership deeds, where partners agree to methods like arbitration or mediation for resolving conflicts. There is no legal restriction preventing partners from including such provisions in their deed.

Therefore, Option 4 is the incorrect statement as it wrongly suggests that dispute settlement methods cannot be part of the partnership deed, when in reality they very much can be and often are included.