5c Partners’ authority and liability Flashcards

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1
Q

What are the two main types of authority that a partner can have?

A
  1. Express - authority specifically given by the other partners.
  2. Implied - what a third party would consider a party can do.
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2
Q

If a partner enters the business into a contract, who is liable to this contract and what is it known as?

A

All partners but a third party can choose to only sue an individual partner. This is known as join and several liability.

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3
Q

What is holding out?

A

If a person, by their words or conduct, represent themselves as if they were a partner, they will be liable as if they were.

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4
Q

When do new partners become liable to debts?

A

New partners only become liable to contracts entered after they became a partner.

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5
Q

Are retiring partners still liable to debts?

A

Only liable to contracts entered before they retired as long as they were to give notice for their registration.

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6
Q

What kind of notice is given when a partner retires from a firm?

A

Actual notice - notice given to all businesses they’re trading with.
Constructive notice - posting in the London Gazette.

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7
Q

If a partner wants to have no liability when they retire, what can they do to achieve this?

A

Novation - an external agreement between the partnership and third party.
Indemnity - internal agreement to say remaining partners will repay the retiring partner should they be sued under partnership contracts.

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