Question

Explain the rule of Garner Vs. Murray with an example.​

Answer 1

Answer:

However, if a partner is insolvent, the other parterns will have to bear the loss. In the event of the insolvency of a partner any losses should be shared in the ratio of the last agreed capital balance before the dissolution took place. This is know as the Garner Vs. Murray.

Explanation:

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Answer 2

Answer:

Garner v Murray

Explanation:

Garner v Murray is applicable in dissolution of firm.

• In 1903, Garner, Murray and Wilkins were equal sharing partners which shares profit and losses equally among the three.
• Wilkins becomes Insolvent therefore there was a situation of dissolution of firm
• Dissolution of firm means the firm closes down its business and comes to an end, the assets of the firm are sold and liabilities are paid off and remaining amount are settled down in the account of partners.
• If one of the partners become insolvent and he is unable to pay back the amount then the remaining partners should rectify the Debit balance of the insolvent partner to settle the account.
• This debit balance should be treated as an Capital Loss and should be borne and settled down by the existing partners.

Decision of case Garner v Murray:

Justice Joyce gave an important judgment :

1. The solvent partners are only liable and rectify the loss of realization in cash,
2. And the remaining assets should be split up among the partners in capital ratios.  

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