Post-dissolution partner authority PA 1890 s. 38
After dissolution, partners' authority continues only for winding up and completing unfinished transactions. Bankrupt partners' acts do not bind. PA 1890 s. 38
After the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution , and in relation to any prosecution of the partnership by virtue of section 1 of the Partnerships (Prosecution) (Scotland) Act 2013 , but not otherwise. Provided that the firm is in no case bound by the acts of a partner who has become bankrupt; but this proviso does not affect the liability of any person who has after the bankruptcy represented himself or knowingly suffered himself to be represented as a partner of the bankrupt.
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 ends, the partners still have the power to act for the firm, but only for tasks that are necessary to close down the business and complete deals that were already underway. They cannot start new business.
However, if a partner becomes bankrupt, the firm is not bound by anything that partner does. But if that person continues to hold themselves out as a partner, they may be personally liable.
When it applies
- Two partners dissolve their firm; one partner orders supplies needed to finish a job they had started before dissolution.
- A partner tries to sign a new lease after dissolution; the other partner challenges it.
- A partner becomes bankrupt and then tries to sell partnership assets; the firm is not bound.
- After dissolution, a partner completes a transaction that was already agreed but not yet delivered.
- A bankrupt partner's name remains on the firm's letterhead and a third party relies on it.
What this section does not say
- This provision does not govern the division of partnership assets after winding up (see s. 39).
- It does not cover the right of a partner to retire without dissolution (see s. 32, 33).
- It does not determine the liability of new partners joining after dissolution.
- It does not apply to the dissolution of a company incorporated under the Companies Act (only partnerships).
That's the law. Now let's settle your problem.
Say what is happening. A neutral mediator hears your side and the other party's, and walks you both to a written agreement. In the advanced settings you can ask for the decision to be reasoned on the Acts of Parliament that apply in England and Wales.
Or open a session directly and invite the other party.
We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.
This page reproduces the text of PA 1890 s. 38 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.