Liabilities of General Partners to Third Parties

Question 1

Applicable agency principles

Answer 1

1. Partners are agents of the partnership for apparently carrying on usual partnership business
2. Therefore, the general partnership is liable for each partner’s torts in the scope of partnership business and for each partner’s authorized contracts

Question 2

Debt Liability

Answer 2

Rule: Each general partner is personally liable for all debts of the partnership and for each co-partner’s torts

 1. Incoming partners are generally not liable for prior debts, but any money paid into the partnership can be used to satisfy those prior debts
2. Dissociating/withdrawing partners retain liability on future debts until actual notice of their dissociation is going to known creditors and until publication notice is given to potential creditors

Question 3

Liability by Estoppel

Answer 3

One who represents to a third party that a general partnership exists will be liable as if the general partnership exists (e.g. “My partner and I….”)