Multiple choice

A, B and C start a partnership firm. After some time, A dies and other partners continue the business in the firm’s name. Later, the firm becomes insolvent. Who will be liable to the creditors as per Section 28 of the Partnership Act?

  1. B and C alone

  2. B, C and A’s legal heirs

  3. B, C and A’s legal heirs and the estate of A

  4. B, C and A’s estate

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

After the death of ‘A’, a partner, the business is continued in the old firm's name. The continued use of that name shall not make A’s legal representative or his estate liable for any act of the firm done after his death. It is termed as principle of holding out. Hence, only B and C will be liable for the insolvency of firm.

Keep practicing — related questions