Garner vs Murray

A Dictionary of Accounting, January, 1999 by R. HUSSEY

Garner vs Murray 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 vs 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 .