Professional Documents
Culture Documents
Incoming Partner: A new partner who will be joining the partnership firm.
Partners to a firm are free to develop any procedure or understanding for
inducting a new partner into their firm. Such a method can be included in the
partnership agreement.
Retirement of a Partner:
(1) A partner can be retired with the consent of all the partners.
(2) If there is any express agreement among the partners as to how an
outgoing partner will leave the firm then that agreement should be
followed.
(3) In the case of Partnership at will: An outgoing partner can leave the firm by
giving a notice to all the other partners of his intention to retire.
(i) There is such an agreement between him & the third party and the
remaining partners in the reconstituted firm. Such an agreement can be
express or implied.
(ii) The retiring partner & the other remaining partners will continue to be
liable to the third parties (for the acts done on behalf of the firm before
the retirement) until public notice is given.
(iii) The retiring partner will not be liable to the third party if such party
deals with the firm without knowing that he was a partner.
Expulsion of a Partner:
Power of expulsion to be exercised in good faith if these are given in the article of
partnership.
When a partner dies or retires without a final settlement of accounts with the
other partners who continue in the business with partnership assets. Law is that
such partner or his successors-in-interest will be entitled to such part of the
subsequent profit as can be attributed to the use of his share of the partnership
assets. As a second option: an annual interest @ 6% of the amount of the share.
Unlawful Expulsion of the Partner: A partner has been unlawfully expelled & the
other partners are continuing with the partnership firm; without settlement of
the accounts. Such expelled partner has instituted a suit for dissolution of
partnership firm & settlement of accounts. The law laid down in section 37 will be
application.
Assignment Question:
(1) Asim, Asif & Abid were in partnership as hairdressers. On 8th April 2002 Abid retired
from the partnership. A few days later, Asim and Asif bought, in the firm’s name an
expensive laser hair dressing machine to replace their traditional machines. On 17thy
April a van arrived with a delivery of seven hair dressing chairs. The van driver showed
them a purchase order in the firm’s name, dated 3 rd April and signed by Abid. Asim &
asif are refusing to pay for the chair. They have also failed to pay for the laser hair
dressing machine & the firm is severe financial difficulties. Both the suppliers are
threatening. Are they bound to pay for both of the transaction? Discuss