| Direction: A principle principles and a fact situation are given in questions decide only on the basis of the principle(s). |
| Principle A partner is liable for the acts done by the other partners, or debts incurred by other partners of a partnership firm in the course of business. |
| Facts Megha, Haya and Bhavna decide to get into a partnership business to jointly sell curtains and bedsheets to the students of NALSAR. They start reaping profits that is jointly divided between the three of them. However, after some transactions they jointly decide to dissolve their business. They however do not make this decision public One day, Megha approaches Noel for a loan of Rs 10000 under the guise of needing it for the business. She misappropriates the money for her personal use. |
A) All three of them are jointly liable since they never made public their decision to dissolve the firm and thereby made it impossible for Noel to know that the loan was to him
B) All three of them are jointly liable since Noel gave Megha the loan in good faith for the partnership firm since she approached him under the guise of appearing on behalf of the partnership firm
C) Only Megha would be liable, since the loan taken was not in the course of business
D) Haya should have advised the other two about the repercussions of not informing everyone of their decision to dissolve the firm and hence would be liable along with Megha
Correct Answer: A
Solution :
All the 3 partners are jointly liable, because a partner is liable for the acts done by others partners or debts incurred by other partners in the course of business. Here Megha asked for a loan of Rs 10000 from Noel, under the guise of needing it for the business. As they never made public their decision to dissolve the firm and thereby made it impossible for Noel to know the truth.
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