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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Ivan, Jo and Kim dissolve their partnership by notice. Before the notice is publicised, Ivan, who has no authority after dissolution to start new business, orders goods from a supplier who has dealt with the firm and does not know of the dissolution. What is the likely legal position?

The firm may be bound because the supplier had no notice of dissolution. A previous creditor who dealt with the firm can rely on the partner's apparent authority until told of the dissolution, so partners should give notice to avoid continuing liability.

  1. AThe supplier cannot recover because dissolution ended all authority immediately
  2. BThe firm may be bound, because the supplier lacked notice of the dissolutionCorrect
  3. COnly Ivan is liable, whatever the supplier knew

Explanation

After dissolution a partner's authority continues only to wind up affairs. However, the firm can remain bound to third parties who dealt with it before and had no notice of the dissolution. The supplier here was unaware, so apparent authority persists.

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