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Partnership Law Act 2019

Relationship of partners to third persons and to each other - Relationship of partners to third persons

33: Rights of persons dealing with firm against apparent members of firm

You could also call this:

"Protecting people who do business with a company when its members change"

When a firm changes who is part of it, anyone dealing with the firm can treat all the people who seemed to be part of the old firm as still being members until they are told about the change.

If the firm puts an advertisement in the Gazette (which is a special government publication) saying that the partnership has ended or changed, this counts as telling people who hadn't dealt with the firm before about the change.

However, there are two important things to remember:

If a partner dies or goes bankrupt, their estate (the money and property they leave behind) doesn't have to pay for any debts the partnership takes on after they die or go bankrupt.

If a partner leaves a firm, they don't have to pay for any debts the partnership takes on after they leave, as long as the person dealing with the firm didn't know that they used to be a partner.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206028.

Topics:
Business > Industry rules
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32: Liability of partner who leaves firm, or

"You might still owe money after leaving a partnership"

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34: Continuing guarantee revoked by change in firm, or

"A promise to back a business ends if the business owners change"

Part 3Relationship of partners to third persons and to each other
Relationship of partners to third persons

33Rights of persons dealing with firm against apparent members of firm

  1. If a person deals with a firm after a change in its composition, the person may treat all apparent members of the old firm as still being members of the firm until the person has notice of the change.

  2. An advertisement in the Gazette of the dissolution of a partnership or of a change in its composition is notice to persons who did not have dealings with the firm before the date of the dissolution or change.

  3. However,—

  4. the estate of a partner who dies or who becomes bankrupt is not liable for partnership debts contracted after the date of the death or bankruptcy:
    1. a partner who leaves a firm is not liable for partnership debts contracted after the date of leaving if the person dealing with the firm did not know that the partner had been a partner of the firm.

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