Four friends formed a partnership a few years ago to run a bakery. They agreed on how to share profits and losses, but the partnership agreement did not contain any other terms. Currently, one of the partners wants to transfer his interest in the business to someone else, and the remaining partners are considering making the assignee a partner.
What is the legal position in this situation?
Four friends formed a partnership a few years ago to run a bakery. They agreed on how to share profits and losses, but the partnership agreement did not contain any other terms. Currently, one of the partners wants to transfer his interest in the business to someone else, and the remaining partners are considering making the assignee a partner.
What is the legal position in this situation?
The partner can assign his interest in the firm, but the assignee does not become a partner unless all partners agree to make the assignee a partner.
(D)A partner's right to receive a share of the profits can be transferred to someone else, so options (A) and (C) are not valid. However, the person to whom this right is transferred does not automatically become a partner. For that to happen, all the existing partners must agree to make them partners, as the transfer of the right alone is not enough.
Option (B) is not correct, as the inclusion of a new partner requires the unanimous agreement of all the existing partners and not just the majority's consent.
Option (E) is also not correct because even if a partner's right to receive profits is transferred, the assignee does not automatically become a partner. The assignee must be unanimously approved by all the existing partners to become a partner.