ExpertMedium2 marksMultiple Choice
Syllabus D: The formation and constitution of business organisationsSection ACorporate and Business Law
ACCA · Question 11 · Syllabus D: The formation and constitution of business organisations
In a general partnership, a partner decides to retire. Which of the following actions must the retiring partner take to avoid liability for future debts incurred by the partnership?
In a general partnership, a partner decides to retire. Which of the following actions must the retiring partner take to avoid liability for future debts incurred by the partnership?
Answer options:
A.
Simply stop attending the partnership premises.
B.
Give actual notice to existing customers and public notice (e.g., in the London Gazette) to new customers.
C.
Sell their share of the partnership to a third party.
D.
Obtain a court order confirming their retirement.
How to approach this question
Identify the statutory requirements for a partner to sever their apparent authority upon retirement.
Full Answer
B.Give actual notice to existing customers and public notice (e.g., in the London Gazette) to new customers.✓ Correct
Section 36 of the Partnership Act 1890 states that a retiring partner must give actual notice to those who have previously dealt with the firm, and constructive notice (e.g., an advertisement in the London Gazette) to those who have not, to avoid being bound by future acts of the firm under apparent authority.
Common mistakes
Assuming that simply leaving the business or telling the other partners is sufficient to end liability to third parties.
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