Question

Choose the correct answers from the alternatives given.
For firms acts after retirement, a retiring partner ________.

• A. is not liable to third party even if no public notice is given of his retirement
• B. is not liable to third party who deals with the firm without knowing. that he was a partner even if no public notice is given of his retirement
• C. continues to be liable to every third party (whether or not having knowledge that he was a partner) if no public notice in give
• D. none of these

Answer 1

The correct option is B is not liable to third party who deals with the firm without knowing. that he was a partner even if no public notice is given of his retirement

Liability of a retired partner - A retired partner is held liable to the debts of his firm and for all the acts of the firm done before and upto the date of his retirement. However, a retiring partner may be discharged from his liabilty to any third party for the acts of his firm done before his retirement by entering into agreement with such third party and partners of the reconstituted firm. Such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of retirement. Thus a third party should recognise the reconstituted firm as its debtor in order to free the retiring partner from his liability.

If a partner retires without giving necessary public notice, he continues to be liable as a partner by holding out. Of course, if a dormant partner retires without giving any public notice, he cannot be held liable as a partner by holding out. A retired partner is not liable to third party who deals with the firm without knowing that he was a partner even if no public notice is given of his retrement.