Reconstitution Of The Firm

Reconstitution of the Firm

UNIT III

Incoming and Outgoing Partners      

Introduction of a new partner Sec. 31 Retirement of a partner Sec. 32 Expulsion of a partner Sec. 33 Insolvency of a partner Sec. 34 Death of a partner Sec. 35 Transfer of partner’s interest Sec. 29

Introduction of a new partner 

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Cannot be made without consent of all partners Liability 

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For acts done after he becomes partner Depends on mutual agreement

Retirement of a partner 

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If he ceases to be partner but others continue It happens  

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With the consent of all In accordance with express agreement In partnership at will, by giving notice

Retirement of a partner 

Liability  

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For all acts before his retirement Continues to be liable until public notice is given

Rights  

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May carry on competing business Can claim 6% interest on share in property Share of profits

Expulsion of a partner Can be done if  Power is given to partners by express contract  Exercised by majority of partners  Exercised in absolute good faith   

Is in interest of the firm Served with notice Opportunity of being heard is given

Rights & Liabilities same as retiring partner

Insolvency of a partner 

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Ceases to be partner from the date of declaration by court Firm is dissolved Partner’s property not liable for firm acts after adjudication Firm not liable for acts of the insolvent after this

Death of a partner   

Firm dissolved Property not liable after death No public notice required

Transfer of partner’s interest  

Can do so with all partners consent Transferee cannot become partner 

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Cannot interfere in the business, require accounts & inspect

Entitled to receive profits