(b) That's right. In theoretical terms, one should say that whenever a partner leaves a partnership, or a new partner joins a partnership, the pre-existing firm comes to an end, and a new one is created to replace it. But in fact the legislative provisions in the Partnership Acts are more practical. Since firms often wish to continue their business uninterrupted, without an immediate full accounting and sharing out of assets between partners, the legislation allows a continuation of the partnership despite a change of membership.
The obvious issues are dealt with in the legislation. Thus, a partner who leaves a partnership remains liable for their share of all the debts that were incurred before they left. A partner who joins an existing firm only becomes liable for debts incurred after they join.
Notice should be given to third persons who deal with a firm after a change in the partners, otherwise apparent partners may be treated as if they are still members of the firm.
A firm may continue to carry on business after a partner leaves, and there is no final settling of accounts with the outgoing partner at the time of their leaving. In such circumstances, the outgoing partner remains entitled either to a share of the ongoing profits to the extent that a court finds those profits are the proceeds of the use of that partner's share of the assets, or to interest at a rate specified in the relevant partnership legislation.