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

Jonas retired from a general partnership of three partners on 1 March. The firm's customers were not told, and the firm's letterhead still showed his name. On 1 April, a continuing partner ordered goods from Kestrel Ltd, which had dealt with the firm before Jonas retired and knew him as a partner. Kestrel Ltd had received no notice of the retirement. Which statement is correct?

Jonas may be liable to Kestrel Ltd. A retiring partner remains liable under apparent authority to earlier customers who had no notice of the retirement, so the firm should give notice to them to end that exposure.

AJonas is not liable, because he took no part in the April order
BJonas may be liable to Kestrel Ltd, because it had no notice of his retirementCorrect
CJonas is liable to every creditor of the firm, whether or not they dealt with him earlier

Explanation

A retired partner stays liable to those who dealt with the firm while he was a partner and who have no notice of his retirement, because they can rely on his apparent authority. The third option is wrong because new customers who never knew him as a partner are not able to rely on his earlier status unless they saw the holding out.

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