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What is rule of Garner v. Murray in Partnership Accounts.


Posted- 2329 days ago
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Garner V murray deals with the insolvency of a partner. If a partner becomes insolvent than the loss arising due to it shall be borne by other partners in their capital ratio and not in profit sharing ratio.

 

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.