Indian Partnership Act, 1932
55. Sale of goodwill after dissolution
- In settling the accounts of a firm after dissolution, the goodwill shall,
subject to contract between the partners, be included in the assets, and it
may be sold either separately or along with other property of the firm.
- Rights of buyer and seller of goodwill-Where the goodwill of a firm is sold
after dissolution, a partner may carry on a business competing with that of the
buyer and he may advertise such business, but, subject to agreement between him and the
buyer, he may not-
- use the firm name,
- represent himself as carrying on the business of the firm,
or
- solicit the custom of persons who were dealing with the
firm before its dissolution.
- Agreement in restraint of trade蟸ny partner may, upon the sale of the goodwill of a firm,
make an agreement with the buyer that such partner will not carry on any
business similar to that of the firm within a specified period or within specified local limits and,
notwithstanding anything contained in section 27 of the Indian Contract Act, 1872
(9 of 1872), such agreement shall be valid if the restrictions imposed are
reasonable.
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