Section 42Part 5 — Dissolution of Partnership and Its Consequences
Right of outgoing partner in certain cases to share profits made after dissolution
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42. (1) Where any member of a firm has died or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or that partner’s estate, then, in the absence of any agreement to the contrary, the outgoing partner or that partner’s estate is entitled at that partner’s option or at the option of that partner’s executors or administrators to such share of the profits made since the dissolution as the court may find to be attributable to the use of that partner’s share of the partnership assets, or to interest at the rate of ten per centum per annum on the amount of that partner’s share of the partnership assets.
Provided that where by the partnership contract an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner or the outgoing partner or that partner’s estate(as the case may be) is not entitled to any further share of profits; but if the partner assuming to act in exercise of the option does not in all material respects comply with the terms thereof, that partner is liable to account under subsection (1).