Liability of Partners Flashcards
What is the rule re: criminal liability of partners for crimes committed by other partners in the scope of the partnership business?
Partners will NOT be criminally liable for the crimes of other partners committed within the scope of the partnership business, UNLESS:
- they participated as principals or accessories
What is a partner’s liability on contracts?
Partners are liable for ALL CONTRACTS entered into by a partner:
(1) in the scope of partnership business; OR
(2) with authority of the partnership
What is a partner’s liability on torts?
Partners are liable for all torts:
(1) committed by any partner or employee of the partnership within the ordinary course of the partnership; OR
(2) with the authority of the partnership
What is the nature of a partner’s liability?
Liability is joint and several for ALL obligations of the partnership, whether in tort or contract.
HOWEVER –> a judgment is not personally binding on a partner UNLESS:
- he has been served;
- creditor has exhausted partnership assets OR is excused by agreement or court order bc partnership is bankrupt
What is the extent of a partner’s liability for a partnership obligations?
Each partner is PERSONALLY and individually liable for the ENTIRE amount of partnership obligations. ‘
- A partner who pays more than his fair share of an obligation is entitled to contribution from the other partners.
- A partner who pays the whole obligation is entitled to indemnification
What is the liability of an incoming partner?
An incoming partner is NOT personally liable for obligations incurred by the partnership before they were a partner.
What is the liability of an outgoing partner?
An outgoing or dissociated partner remains liable for obligations arising while he was a partner UNLESS there was a payment, release, or novation.
An outgoing partner MAY also be liable for acts done after dissociation. (Come back to)
