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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Gopal, Hasina and Inder are partners. The deed is silent on what happens if a partner dies. Inder dies during the year. Which statement is correct?

The firm is dissolved on Inder's death. Under the Act, death of a partner dissolves the firm unless the partners' contract says otherwise. As the deed is silent, the default rule applies automatically, with no need for notice from heirs or a court order.

  1. AThe firm is dissolved on Inder's death, because the deed has no contrary contractCorrect
  2. BThe firm continues automatically as the remaining partners are always entitled to carry on
  3. CThe firm is dissolved only if Inder's legal heirs give notice
  4. DThe firm is dissolved only after a court declares it so

Explanation

Subject to a contract between the partners, the death of a partner dissolves the firm. Since the deed is silent, the default rule applies. Option B would be right only if the deed provided for continuation.

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