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

Meera, a retired partner of the firm Meera & Co., gave no public notice of her retirement. A supplier, who knew her as a partner and had dealt with the firm earlier, supplied goods on credit to the firm after her retirement. Which statement is correct?

Meera is liable to the supplier. Because she gave no notice of retirement and the supplier had earlier dealt with the firm knowing her as a partner, she continues to be treated as a partner to him and cannot escape liability by pointing to her actual retirement.

  1. AMeera is not liable because she retired and ceased to be a partner in fact
  2. BMeera is liable to the supplier as a partner by holding out, since no notice of retirement was given to those who dealt with the firmCorrect
  3. CMeera is liable only if she personally received the goods
  4. DMeera is liable only to the extent of her old capital contribution

Explanation

A retiring partner continues to be liable to third persons who had dealings with the firm and who have not received notice of the retirement. The supplier knew her as a partner and had no notice, so she remains liable for the credit supply. Actual retirement alone does not protect her from such third parties.

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