Partnership liability
The liability of partners to 3rd parties for each other’s acts, (joint, joint and several or several) will vary depending on the acts in question. For example:
- Partners are jointly responsible for the contractual debts of a partnership (section 9 of the Partnership Act). If a creditor obtains judgement against one, or a number of the partners, this will not discharge the others
- The estate of a deceased partner has several liability for the debts of the firm to the extent that they are not otherwise satisfied (section 9, the Act).
- Wrongful acts or omissions, such as torts, of any partner acting in the ordinary course of the business or with the authority of the other partners gives rise to joint and several liability. The same is the case where a partner acting within the scope of his apparent authority receives money or property from a third party and misapplies it and where the firm, in the course of its business, receives such money or property and it is misapplied by one or other of the partners while in the custody of the firm (sections 10 to 12, the Act).
Partners may of course regulate the position amongst themselves by way of indemnities or agree with 3rd parties to vary the usual joint and several liability position. The above relates to general partnerships and not LLP’s where the position is completely different and which are more akin to Limited Companies.
