Relations of Partners to Third Parties: Liability of a Partner for Acts of the Firm

A partner is jointly and severally liable for the acts of the firm. This means that all of the partners are liable for the full amount of the debt, even if only one partner is responsible for it.

The liability of a partner for the acts of the firm is not affected by whether the partner was aware of the act or whether the partner participated in it.

The liability of a partner for the acts of the firm can be limited by the partnership agreement. However, the limitation must be in writing and it must be brought to the attention of the third party.

Here are some MCQs on the relations of partners to third parties: liability of a partner for acts of the firm:

  1. Which of the following statements is true?
    • A partner is jointly and severally liable for the acts of the firm.
    • The liability of a partner for the acts of the firm is not affected by whether the partner was aware of the act or whether the partner participated in it.
    • The liability of a partner for the acts of the firm can be limited by the partnership agreement.
    • All of the above.
    • The answer is (d). All of the above statements are true.
  2. A partner in a law firm makes a contract with a third party to represent the third party in a lawsuit. The partner does not have express authority to make the contract. Is the firm liable for the contract?
    • Yes, the firm is liable for the contract.
    • No, the firm is not liable for the contract.
    • The answer is (a). The firm is liable for the contract, as all partners are jointly and severally liable for the acts of the firm, even if the partner did not have authority to make the contract.
  3. A partnership agreement limits the liability of a partner to $10,000. A partner in the partnership makes a contract with a third party for $20,000. Is the partner liable for the full amount of the contract?
    • Yes, the partner is liable for the full amount of the contract.
    • No, the partner is only liable for $10,000.
    • The answer is (b). The partner is only liable for $10,000, as the limitation of liability is in writing and it was brought to the attention of the third party.