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Chapter 6

Liability for partnership debts

The firm is liable for contracts made by a partner if he was acting within his express
or implied authority.

If a partner acts in a way that is within the usual business of the partnership it is likely
that the partnership will be bound by their actions (even if they are acting beyond
their actual authority) unless

 He has no actual authority and

 The third party either knows he has no actual authority for the transaction or
does not believe him to be a partner.

Liability of partners

Every partner is responsible for the full amount of the firm’s liabilities.

Outsiders have the choice of taking action against the partners
collectively, or against individual partners. This is referred to as joint
and several liability.

If damages are recovered from one partner only, the other partners are
liable to contribute equally to the amount paid.

Holding out

A person who, by his words or conduct, represents himself (or let’s himself be
represented) as a partner, is liable as if he is a partner to anyone who gives credit to
the firm as a result of that representation.

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