New Upcoming Legal Jobs Free Workshop March 11 at 5 PM. Register here

    Question

    According to Indian Partnership Act, 1932 What is the

    liability of a retiring partner for acts done by the firm before retirement after an agreement is made by him with third party and the partners of the reconstituted firm
    A The retiring partner remains fully liable for all acts of the firm. Correct Answer Incorrect Answer
    B The retiring partner is partially liable for acts done by the firm. Correct Answer Incorrect Answer
    C The retiring partner's liability is transferred to the reconstituted firm. Correct Answer Incorrect Answer
    D The retiring partner is discharged from liability for acts before retirement. Correct Answer Incorrect Answer
    E The retiring partner's liability is limited to acts done after retirement. Correct Answer Incorrect Answer

    Solution

    Section 32 of Indian Partnership Act, 1932 A partner may retire— (a) with the consent of all the other partners, (b) in accordance with an express agreement by the partners, or (c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire. (2) A retiring partner may be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party and the partners of the reconstituted firm, and such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of the retirement. (3) Notwithstanding the retirement of a partner from a firm, he and the partners continue to be liable as partners to third parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement: Provided that a retired partner is not liable to any third party who deals with the firm without knowing that he was a partner. (4) Notices under sub-section (3) may be given by the retired partner or by any partner of the reconstituted firm.

    Practice Next

    Relevant for Exams: