This document summarizes key sections of the Partnership Act of 1932 regarding incoming and outgoing partners, as well as dissolution of partnerships. Key points include: introduction of a new partner requires consent of all existing partners; a retiring partner ceases being a partner when others continue the business; a partner can be expelled by majority for the firm's benefit with proper procedures; and a firm may dissolve by agreement, contingencies like death or insolvency of a partner, or by court order for issues like misconduct.

1. Presentation on Partnership
Act, 1932
(Sections: 31-55)
Company Law Tutorial
Shariful Islam
LLB, 3rd
Year
Department of Law
University of Dhaka

2. INCOMING AND OUTGOING
PARTNERS
Introduction of a partner (S.31)
Retirement of a partner (S.32)
Expulsion of a partner (S.33)
Insolvency of a partner (S.34)
Liability of estate of deceased partner (S.35)
Rights of outgoing partner to carry on competing
business, Agreement in restraint of trade (S.36)
Right of outgoing partner in certain cases to share
subsequent profits (S.37)
Revocation of continuing guarantee by changes in firm
(S.38)

3. Introduction of a partner (S.31)
No partner can be admitted as a partner into a firm
without the consent of all the existing partners.
Mutual trust and confidence among the partners being an
essential ingredient of an ideal partnership, it is essential
that here must be a consent of all the partners.
Liability of an incoming partner
A new partner becomes liable for the debts and acts of
the firm only from the date he is admitted as a partner.

4. Retirement of a partner(S.32)
A Partner is said to retire when the surviving
partners continue to carry the business of the
firm, and the retiring member ceases to be a
partner…

5. Expulsion of a partner(S.33)
A partner may be expelled from a firm by majority of the
partners only if:
a.) the power to expel has been conferred by contract
between the partners.
b.) such a power has been exercised in good faith for the
benefit of the firm.
The partner who has been expelled must be given
reasonable opportunity to explain his position and to
remove the cause of his expulsion.

6. Insolvency of a partner(S.34)
When a partner in the firm is adjudicated as insolvent, he
ceases to be a partner on the date on which the order of
adjudication is made, whether or not the firm is thereby
dissolved will depend upon the agreement of partnership
between the partners.
The insolvent partner’s share in the firm’s assets will be
used for firm’s debts first and whatever remains will be
utilised for the insolvent partner’s personal debts

7. Liability of estate of deceased
partner(S.35)
Although on the death of a partner, the firm is dissolved,
but if the other partners so agree the firm may not be
dissolved. When a firm is not dissolved, the estate of the
deceased partner is not liable for any acts of the firm done
after his death. No public notice of death is required to
relieve the deceased partner’s estate from future
obligations.

8. • Rights of outgoing partner to carry on
competing business, Agreement in
restraint of trade(S.36)
• Right of outgoing partner in certain
cases to share subsequent
profits(S.37)
• Revocation of continuing guarantee by
changes in firm(S.38)

9. Dissolution of partnership firm

10. Dissolution of the Firm
Section. 39 provides that the dissolution of partnership
between all the partners of a firm is called ‘dissolution of the
firm.’
Modes of dissolution
A firm may be dissolved in any one of the following ways:
1.By Agreement (S.40)
2. Compulsory Dissolution (S.41)
3.On the happening of certain contingencies (S.42)
4.By Notice (S.43)
5.Dissolution by the Court (S.44)

11. 1.By Agreement (S.40):
A firm may be dissolved with the consent of all the
partners or in accordance with a contract between the
partners. Partnership is created by a contract, it can
also be terminated by a contract.

12. 2. Compulsory Dissolution (S.41):
A firm may be compulsorily dissolved if-
a.) When all the partners, or all the partners but
one, are adjudged insolvent.
b.) When some event has happened which
makes it unlawful for the business of the firm to be
carried on.

13. 3. On the happening of certain
contingencies (S.42):
Subject to a contract between the partners, a firm may
be dissolved if:
a.) if constituted for a fixed term, by the expiry of
that term.
b.) If constituted to carry out one or more
adventures or undertakings, by the completion
thereof.
c.) By the death of the partner.
d.) By the adjudication of partner as an insolvent.

14. 4. By notice (S.43):
Where the partnership is at will, the firm may be
dissolved by any partner giving the notice in writing to all
the other partners of his intention to dissolve the firm. A
notice of dissolution once given cannot be withdrawn
without the consent of all the other partners.a

15. 5. Dissolution by the Court (S.44):
Dissolution by the court is necessitated when there is a
difference of opinion between the partners regarding the
matter of dissolution in cases of:
a.) Insanity
b.) Permanent Incapacity
c.) Misconduct
d.) Persistent breach of agreement
e.) Transfer of interest
f.) Just and Equitable

16. Liabilities, Rights and other provisions
regarding Dissolution
• Liabilitiy for acts of partners done after dissolution
(S.45)
• Right of partners to have business wound up after
dissolution (S. 46)
• Continuing authority of partners for purposes of
wounding up (S. 47)
• Mode of settlement of accounts between partners
(S.48)
• Payment of firm debts and of separate debts (S.49)

17. Contd.
• Personal profits earned after dissolution (S.50)
• Return of premium on premature dissolution
(S.51)
• Rights where partnership contract is rescinded
for fraud or misrepresentation (S.52)
• Rights to restrain from use of firm name or
firm property (S.53)
• Agreement in restraint of trade (S.54)
• Sale of goodwill (S.55)