Question

Assertion (A): Admission of a partner does not mean dissolution of the firm, but dissolution of the old partnership.

Reason (R): Admission of a partner means reconstitution of the partnership, whereby the old partnership ceases to exist, and the new partnership comes into existence. However, the firm continues.

In the context of the above two statements, which of the following is correct?

Options

• (A) and (R) both are correct and (R) correctly explains (A).

• Both (A) and (R) are correct, and (R) does not explain (A).

• Both (A) and (R) are incorrect.

• (A) is correct but (R) is incorrect.

Answer 1

(A) and (R) both are correct and (R) correctly explains (A).

Explanation:

Both Assertion (A) and Reason (R) are correct and encapsulate the nuanced legal understanding of a partner’s admission. Assertion (A) makes the critical distinction that the business entity (“the firm” continues, but the underlying legal relationship (“the partnership agreement”) changes. Reason (R) perfectly explains why this distinction holds true: the event is termed a “reconstitution” where a new agreement forms while the firm’s operations persist. Thus, (R) provides the precise context and legal rationale for the statement made in (A).