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Partnership Law Act 2019

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

34: Continuing guarantee revoked by change in firm

You could also call this:

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

If you give a continuing guarantee to a firm or to someone else about a firm's transactions, it will stop applying to future transactions if the members of the firm change. This means that if partners join or leave the firm, your guarantee won't cover any new deals the changed firm makes. However, you and the firm can agree to keep the guarantee going even if the firm changes. If you make such an agreement, then the guarantee will continue to apply to future transactions despite changes in the firm.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206029.

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

34Continuing guarantee revoked by change in firm

  1. The following are revoked in relation to future transactions by any change in the composition of a firm:

  2. a continuing guarantee given to the firm in respect of the firm’s transactions:
    1. a continuing guarantee given to a third person in respect of the firm’s transactions.

      1. This section does not apply if there is an agreement to the contrary.

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