In which of the following case Garner v Murray rule is NOT applicable?
1. Only one partner is solvent.
2. All partners are insolvent.
3. When partnership deed provides a specific method to be followed in case of insolvency of a partner
Select the correct answer from the options given below-
In which of the following case Garner v Murray rule is NOT applicable?
1. Only one partner is solvent.
2. All partners are insolvent.
3. When partnership deed provides a specific method to be followed in case of insolvency of a partner
Select the correct answer from the options given below-
The correct option is D 1, 2 & 3
According to
Garner vs. Murray rule, if the partner becomes insolvent, he is unable to pay
back the amount due to him. The amount not paid is a capital loss which should
be borne by the solvent partner in the ratio of their capitals standing in the
balance sheet on the date of dissolution of the firm. This rule is applicable when one partner is insolvent then other partner can bring the cash. But if only one partner is solvent or all partners are insolvent then there is no one to bring the cash. so this rule can not be applied. And if Partnership deed provides a method to follow then that method will be followed only.
According to Garner vs. Murray rule, if the partner becomes insolvent, he is unable to pay back the amount due to him. The amount not paid is a capital loss which should be borne by the solvent partner in the ratio of their capitals standing in the balance sheet on the date of dissolution of the firm. This rule is applicable when one partner is insolvent then other partner can bring the cash. But if only one partner is solvent or all partners are insolvent then there is no one to bring the cash. so this rule can not be applied. And if Partnership deed provides a method to follow then that method will be followed only.
