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PARTNERSHIP ACT 1890 - SECT 42

Right of outgoing partner in certain cases to share profits made after dissolution.

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 his estate, then, in the absence
of any agreement to the contrary, the outgoing partner or his estate is
entitled at the option of himself or his representatives to such share of the
profits made since the dissolution as the Court may find to be attributable to
the use of his share of the partnership assets, or to interest at the rate of
five per cent. per annum on the amount of his share of the partnership assets.

(2) 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 his estate, as the case may be,
is not entitled to any further or other share of profits; but if any partner
assuming to act in exercise of the option does not in all material respects
comply with the terms thereof, he is liable to account under the foregoing
provisions of this section.

© 1890 Crown Copyright

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