Insolvency of a partner

Section 34(1): An insolvent is not allowed to continue as a partner and therefore a person who is adjudicated insolvent ceases to be a partner on the date on which order of adjudication is made whether on adjudication of partner the firm is dissolved or not depends upon the contract between partners Section 42(d) provides unless the partners agree otherwise a firm is dissolved by adjudication of partner as insolvent.

Liability of an insolvent partner
Section 34(2): Where the firm is not dissolved on adjudication of a partner as insolvent and other partners agree to continue the business. The estate of insolvent partner is not liable for the act of the firm after the date of adjudication. In this case, he is absolved from liability for future acts even though no public notice of his being adjudicated insolvent is given.

Death of a partner – Section 35

On the death of a partner, a firm is dissolved but if the other partners so agrees the firm may not be dissolved and the business may continue with remaining partners.
– The liability of a dead partner is same as that of an insolvent partner if the firm is not dissolved on the death of the partner the estate of deceased partner is not liable for act of firm done after his death.
– No public notice is required to be given on the death of a partner.

Similar Posts