| Legal Principle Every partner is liable alone and jointly with other partners for the debts of a partnership firm incurred for the business. Every partner is an agent of every other partner while being a principal in his own right in the business of the partnership. |
| Fact Situation Varun is a partner in a firm with Chinmoy and Jaffar. Jaffar purchases a car for his personal purpose and obtains credit for the same in the name of the partnership behind the back of the other partners. He fails to pay the due amount on the expiry of the period of credit. |
| Which of the following statements is the most appropriate in relation to the legal principle stated above? |
A) Varun, Chinmoy and Jaffar are liable-to pay for the car since they are partners and the credit was obtained in the name of the firm.
B) Varun and Chinmoy are not liable to pay for the car since Jaffar purchased it for his personal purpose.
C) Varun, Chinmoy and Jaffar are liable as partners for all credit obtained in the name of the firm even if it is for the personal purpose of a partner.
D) Jaffar can use the credit of the firm to make purchases even for personal purposes since he is a partner in the partnership.
Correct Answer: B
Solution :
Sol. In the given Fact Situation, Varun and Chinmoy are not liable to pay for the car since Jaffar purchased it for his personal purpose. As per the given Legal Principle every partner is liable alone and jointly with other partners for the debts of a partnership firm incurred for the business not for the personal utility.
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