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26 March 2010 what is garner vs merry rules in partnership?

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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26 March 2010 it is an case law based rule for dissoution of partnership

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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26 March 2010 In 1930,3 persons started business in britain there names
were GARNER,MURRAY & WILKINS they share profit & loss
equally.On 30 June,1900 Wilkins become insolvent and
nothing amount could be realised from his private estate
and the firm is facing loss of 898 pond including wilkins
drawing of 263 pond which is born by Garner &
murray.But,they disagree with the distribution of
loss.So,they file in the court.
In 1903, chief justice
Mr.JOES gave an important decision in this case that
decision is known as GARNER V/S MURRAY RULE.The decision
was as follow:-
The rule that emerged from the Garner vs
Murray case is applied to adjust the loss, if any, due to
insolvency. This rule states that the loss due to
insolvency of a partner is to be charged to the other
solvent partners who have a credit balance in their
accounts in the ratio of capitals just before dissolution

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CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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26 March 2010 this rule says that when a partnership firm is dissolved...
then first of all, all partners shall bring the realisation
loss in cash in their profit sharing ratio... following
that, if any partner is found insolvent then the solvent
partners who have credit balance in their capital a/cs
shall bear the loss of the insolvent partner in their
profit sharing ratio