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LIABILITY


A firm is liable for torts committed against 3rd parties by any of the partners in the cause of the partnership business.  Whereas liability in respect of debts and other contractual obligations is joint, liability in respect of Torts is both joint and several.  Thus with regard to debts and other contractual obligations, the plaintiff can bring only one action but in tort he may find separate actions against each partner.

Duration of Liability:
Liability lasts from the time one becomes a partner until dissolution and winding up of the business.  Consequently a new partner is not liable for old debts and a retired partner is generally not liable for future debts.  These principles may however be negated by the doctrine of novation which is an arrangement whereby a new partner agrees to be liable for existing debts or whereby a retiring partner undertakes to be liable for future debts.

Holding Out:
Section 18 PA provides that every person who by words spoken or written or by conduct represents himself or who knowingly suffers himself to be represented as a partner in a particular firm is liable as a partner to anyone who has on the faith of such representation given credit to the firm.  The word knowingly in this context does not include carelessness in allowing oneself to be represented.  Under Section 40 PA when a person deals with a firm after a change in its constitution, he is entitled to treat all apparent members of the old firm as still being members of the firm until he has notice of the change.  For this purpose an advertisement in a Gazette is construed as Notice only to those persons who did not have dealings with the firm before the date of the change so advertised.  Refer to Tower Cabinet Co. Ltd V. Ingram [1949] 2 KB 397  Facts were as follows:  In 1946  Christmas and Ingram entered into a partnership and carried on the business of household furniture under the name ‘Merry’s’.  The partnership was dissolved in April 1947 but Christmas continued to carry on business under the same name.  In 1948 Tower Company Limited  which had not previously dealt with “Merry’s” received an order to supply Merry’s with some furniture.  The price for the furniture was never paid and the company obtained judgment against Merry’s.  It thereafter sort to enforce this judgment against Ingram.  The only knowledge which the company had of Ingram was that his name appeared on some old headed notepaper which had been used by Christmas without Ingram’s authority in confirming an order for the purchase of the furniture and which Ingram had failed to destroyed before he left the firm.  So did Ingram knowingly suffer himself to be held out as a partner?  The court held Ingram was not liable under Section 18 because he had not knowingly suffered himself to be represented as a partner.  It therefore appears that there should be conscious knowledge that a person is being held out before he can be liable as a partner.  Negligence per se is not adequate to make him liable.

 
 
 

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