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CSEET · Business Laws and Management · Elements of Law relating to Partnership and Limited Liability Partnership

Consider these statements about a partner's retirement under Section 32 of the Indian Partnership Act, 1932. I. A retiring partner may be discharged from liability to a third party for the firm's earlier acts by an agreement with that third party and the partners of the reconstituted firm. II. Such an agreement can never be implied and must always be express. III. Notice of retirement under Section 32(3) may be given by the retired partner or by any partner of the reconstituted firm. Which is correct?

Statements I and III are correct. A retiring partner can be discharged by agreement with the third party and the reconstituted firm's partners, and notice may be given by the retired partner or any partner of the reconstituted firm. Statement II is wrong because the agreement may be implied by a course of dealing.

  1. AI and II only
  2. BII and III only
  3. CI and III onlyCorrect
  4. DI, II and III

Explanation

Section 32(2) permits discharge by agreement with the third party and the reconstituted firm's partners, and says the agreement may be implied by a course of dealing after the third party knew of the retirement. So statement II is wrong. Section 32(4) allows notice to be given by the retired partner or any partner of the reconstituted firm, so III is correct.

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