A firm's goodwill is sold on dissolution. In the absence of an agreement with the buyer altering the…
Section 55(2) of the Indian Partnership Act, 1932 allows a partner to compete with the buyer of goodwill. Under the statutory default the partner cannot use the firm name,…
Choose your answer
A firm's goodwill is sold on dissolution. In the absence of an agreement with the buyer altering the statutory position, what may a former partner do under section 55 of the Indian Partnership Act, 1932?
Answer and explanation
Correct answer C
Section 55(2) of the Indian Partnership Act, 1932 allows a partner to compete with the buyer of goodwill. Under the statutory default the partner cannot use the firm name, claim to continue the old business, or solicit its former customers. Section 55(3) permits reasonable agreed restrictions on competing.
Option feedback
Option A
Section 55(2)(a) restricts use of the firm name under the stated default.
Option B
Section 55(2)(b) restricts claiming to carry on the old firm's business.
Option C
Section 55(2) allows competition, subject to any valid restriction agreed under section 55(3).
Option D
Section 55(2)(c) restricts solicitation of the old firm's customers under the stated default.
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