Partner liability after leaving firm PA 1890 s. 36
Former partners stay liable to old clients until notified. Gazette ads inform new clients. Bankrupt, deceased, and unknown retired partners are exempt.
Where a person deals with a firm after a change in its constitution he is entitled to treat all apparent members of the old firm as still being members of the firm until he has notice of the change. An advertisement in the London Gazette as to a firm whose principal place of business is in England or Wales, in the Edinburgh Gazette as to a firm whose principal place of business is in Scotland, and in the Belfast Gazette as to a firm whose principal place of business is in Ireland, shall be notice as to persons who had not dealings with the firm before the date of the dissolution or change so advertised. The estate of a partner who dies, or who becomes bankrupt, or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable for partnership debts contracted after the date of the death, bankruptcy, or retirement respectively.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
When a partnership changes its members, customers who dealt with the firm beforehand may treat all apparent members of the old firm as remaining partners until they receive notice of the change. An apparent member is someone who was publicly known or presented to the customer as a partner.
For new customers who had no dealings with the firm prior to the change or dissolution, placing an advertisement in the appropriate official Gazette—such as the London Gazette for firms in England and Wales—serves as sufficient notice to end that liability.
Specific exemptions apply to partners who leave without being known to the customer as partners, as well as partners who die or become bankrupt. The estate of a deceased or bankrupt partner, and any former sleeping or unannounced partner who retires, cannot be held liable for partnership obligations created after their death, bankruptcy, or retirement.
When it applies
- A regular supplier continues delivering goods to a firm without knowing one of the main partners quietly retired.
- A new customer hires a firm after a partner leaves, where the firm had already published a notice of dissolution in the London Gazette.
- A creditor attempts to claim payment from the estate of a partner who died before the business debt was incurred.
- A client attempts to hold a retired silent partner responsible for a contract made after retirement, when the client never knew that person was a partner.
What this section does not say
- Whether partners have the right to expel a member from the partnership, which is governed by pa1890s.25.
- How to settle final partnership accounts and distribute assets upon dissolution, covered under pa1890s.44.
- An outgoing partner's right to share profits made after leaving the firm, governed by pa1890s.42.
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This page reproduces the text of PA 1890 s. 36 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.