Liabilities of a Partnership Flashcards
(8 cards)
General Partnership Liability For Acts of Partners
GP is liable for any torts committed by a partner or employee if:
1) Was within the ordinary course of the business
2) Was acting upon the authority of partnership.
Can a GP be individually sued?
Yes! Because it is a separate legal entity.
ESSAY TIP: When discussing partnership liability, talk about both 1) The actual partnership; and 2) the partners/employees themselves!
GP Liability: Indemnification
WHen a partner incurs personal liablit during the regular course of partnership conduct, partnership is required to indemnify the partner.
Liability of Partners in a GP
All partners are jointly and severally liable for all obligations in a GP, including torts.
This means that each partner can be personally sued for the entire amount.
When may a partnership be bound to a contract?
A partner’s act that was authorized by the partnership, including entering a contract, binds the partnership.
There are three types of authority: actual express, implied, and apparent authority.
In addition, a partnership may ratify a contract even if it was entered into without its authority.
Partnership: Breach of Duty of Care
A partner owes a duty of care to the partnership to refrain from negligent, reckless, or unlawful conduct.
A partnership may pursue legal action for violating a duty that caused the partnership harm.
What is indemnification?
The partnership is required to pay a partner back when the partner is personally sued for matters that occur during the regular course of business.
What is ratification?
Ratification occurs when a principal *affirms a prior act** that was done on their behalf.
This is another way to establish authority.
