After the dissolution of a firm, the partners continue to be liable for the acts of the firm done while they were partners. However, this liability is limited to acts done by any of them which would have been an act of the firm if done before the dissolution.
For example, if a partner after the dissolution of the firm signs a contract in the name of the firm, the other partners will be liable for the contract.
The liability of the partners for acts done after the dissolution of the firm can be avoided by giving public notice of the dissolution. The notice must be given in such a manner as to bring it to the knowledge of third parties who may deal with the firm.
Multiple Choice Questions
- A partner after the dissolution of the firm signs a contract in the name of the firm. Are the other partners liable for the contract?
- Yes.
- No, only the partner who signed the contract is liable.
- The liability of the other partners depends on whether they gave public notice of the dissolution.
The answer is the liability of the other partners depends on whether they gave public notice of the dissolution. If they did not give public notice, they will be liable for the contract.
- The partners of a firm dissolve the firm but do not give public notice of the dissolution. A third party enters into a contract with the firm after the dissolution. Are the partners liable for the contract?
Yes, the partners are liable for the contract. The third party is not bound by the dissolution of the firm if they did not have knowledge of it.
- A partner gives public notice of the dissolution of the firm. Can he still be held liable for the acts of the firm done after the dissolution?
No, the partner cannot be held liable for the acts of the firm done after the dissolution if he gave public notice of the dissolution.
Answers
- The liability of the other partners depends on whether they gave public notice of the dissolution.
- Yes.
- No.