Multiple choice

A and B are the only two partners in a firm. B was murdered by C, who wanted to become a partner of the firm, but B has raised objections to it. A now wants to take D as a partner in the said firm. D is father of C. In light of the situation answer, which of the following is correct?

  1. The original partnership is dissolved.

  2. The original partnership is not dissolved and A and D can continue.

  3. A and D has to enter into a fresh agreement and create a new partnership.

  4. Both (1) and (3)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under Indian Partnership Act, death of a partner dissolves the firm (Section 42). So the original partnership between A and B is dissolved when B dies. After dissolution, A cannot simply admit D as a partner to continue the old firm - the old partnership no longer exists. A and D must enter into a fresh agreement to create a new partnership if they wish to carry on business. Both dissolution of old partnership and need for new agreement are required.

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