Garner v Murray

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A case (1904) cited in the determination of the dissolution of a partnership. If any partners have a debit balance on their capital accounts at the end of the dissolution of a partnership, they must make the necessary contribution to the partnership. However, if a partner is insolvent, the other partners will have to bear the loss (see insolvency). In the event of the insolvency of a partner any losses should be shared in the ratio of the last agreed capital balances before the dissolution took place. This is known as the Garner v Murray rule. Many partnership agreements specifically exclude this rule, however, and agree instead that any such deficit will be borne in the profit-sharing ratio.

Subjects: Accounting.

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