Power and Liability of Partners Flashcards
Tort Liability of a Partnership
A general partnership, limited partnership, or LLP is liable for the wrongful acts or omissions of ANY partner acting:
(1) Within the ordinary course of the partnership’s business;
OR (2) With the authority of ALL other partners
Tort Liability of Partners (General v. Limited)
General Partners. General partners are jointly and severally liable for ALL obligations of the partnership arising from any wrongful act or omission of any partner acting: (1) Within the ordinary course of the partnership’s business; OR (2) With the authority of ALL other partners. Limited Partners.
Limited partners are NOT personally liable for obligations of the limited partnership arising from the wrongful acts or omissions of other partners. However, limited partners are always liable for their OWN misconduct.
Contract Liability of the Partnership
Each partner is an agent of the partnership. Therefore, the actions of every partner that are made within the ordinary course of business to carry on the partnership’s business (e.g., entering into contracts in the partnership’s name), bind the partnership, UNLESS the partner taking the action: (1) Has NO authority to act on behalf of the partnership; AND (2)The other side has knowledge or notice that the partner lacks authority.
Actions taken by a partner that are OUTSIDE the ordinary course of the partnership’s business do NOT bind the partnership UNLESS the other partners unanimously authorizethe action with actual or apparent authority
Contract Liability of Partners (General v. Limited)
General Partners. General partners are jointly and severally liable for ALL debts and obligations ofthe partnership.
Limited Partners. Limited partners are personally liable for the debts of the limited partnership ONLY to the extent of their investment in the limited partnership. However, limited partners are always liable for their own misconduct.
