RETIREMENT AND DEATH OF A PARTNER
When a partner leaves from a partnership firm, it is known as retirement. The reasons for the retirement of a partner may be illness, old age, better opportunity elsewhere, disagreement with other partners, etc. On retirement of a partner, existing agreement comes to an end. The firm is reconstituted and other partners continue the partnership firm with a new agreement. A partner who retires from the firm is called an outgoing partner or a retiring partner.
Section 32(1) of The Indian Partnership Act, 1932 states that a partner may retire from the firm
a) with the consent of all the other partners,
b) in accordance with an express agreement by the partners, or
c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.
The retiring partner is liable for all the acts of the firm up to the date of his retirement. It is necessary for the retiring partner to give a public notice of his retirement from the firm to get relieved from the liabilities to the third parties for the acts of the firm after the retirement. The remaining partners must settle the amount due to the retiring partner.