ordinary course of partnership business. Examples: the partner is responsible for an automobile accident while on firm business, or if the partner is negligent in carrying out a contract and, as a result, injures a third party. Another example is when a partner fraudulently misrepresents a state of affairs to a third party to induce the third party to enter into a contract with the firm A partnership is liable for the acts of the individual partners if committed in the course of partnership business. The admission of a new partner to a firm does not automatically render the new partner liable for the existing debts for the partnership. Under the Partnerships Act, a new partner is not liable for any debts incurred before the person becomes a partner. But a partner may agree to assume existing debts if he or she wants, by express agreements with the previous partners A retiring partner is not relieved of debts incurred while a partner, but if proper notice of retirement is given to all persons who had previous dealings with the firm (and to the
public at large) the retiring partner would not be liable for partnership debts incurred after the date of retirement Look at checklist of issues for a partnership agreement on page 289 Liability of a Partnership for the Acts of its Employees A partnership may employ others to perform partnership work in much the same way as any employer It is the partnership firm that is the employer, and the partners are responsible for the direction and supervision of the employees in the performance of their duties. The firm may also be bound in contract by the actions of their employees or he liable for torts committed by employees under certain circumstances Also, a partnership may be liable on a contract entered into by an employee, if the employee has authority to enter into a contract to sell certain goods to a customer Rights and Duties of Partners to One Another With most agreements, the parties, within the bounds of the law of contract and specific laws relating to partnerships, may establish their own rights and duties with respect to each other They don’t have to have a written agreement but if they don’t, their rights and obligations to one another will be defined as in the Act Under the Act, all property and rights brought into the partnership by the partners, and any property acquired by the partnership thereafter, become partnership property. They may be held and used for the benefit of the partnership, or in accordance with any agreement of the partners. Any land acquired by, or on behalf of, a partnership, regardless of how the title is held by the partners, is considered to be bought in trust for the benefit of the partnership, unless established to be otherwise The act provides number of rules that, in the absence of any express or implied agreement to the contrary, determine the partners’ interest with respect to each other.
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- Spring '10
- Business Law, Corporation, partner, Types of companies, Legal entities