A, B and C are partners. C retires and X joins. No public notice of C’s retirement is given. Z had…
A, B and X are liable for firm acts while they are partners. C remains liable to the customer for qualifying post-retirement firm acts until public notice of retirement,…
Choose your answer
A, B and C are partners. C retires and X joins. No public notice of C’s retirement is given. Z had dealt with the firm knowing C to be a partner, does not know of C’s retirement, and later extends credit in the ordinary course of the continuing firm’s business. The debt arises after X joins. Whom can Z sue for this debt?
Answer and explanation
Correct answer A
A, B and X are liable for firm acts while they are partners. C remains liable to the customer for qualifying post-retirement firm acts until public notice of retirement, where the customer knew C was a partner. These are joint and several liabilities, not an exclusive election between two sets of defendants. X’s protection against pre-admission debts does not cover this later debt.
See sections 25, 31(2) and 32(3) of the Indian Partnership Act, 1932.
Option feedback
Option A
All four are liable on the specified post-change debt and knowledge facts.
Option B
This omits X, who was a partner when this debt arose.
Option C
The alternatives are not exclusive; continuing, incoming and still-liable retiring partners can all be sued.
Option D
This omits both X’s current liability and C’s continuing liability without notice.
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