ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships
A partnership is dissolved and its assets are realised. The firm's assets are insufficient to pay its creditors. Which statement about the partners' position is correct under general partnership law?
Creditors can pursue the partners personally for the shortfall. General partners have unlimited liability for the firm's debts, so once partnership assets run out, creditors may claim against partners' private assets, not just the contracting partner.
- ACreditors may claim only against the firm's assets, since partners have limited liability
- BCreditors can pursue the partners personally for the unpaid balance of the firm's debtsCorrect
- COnly the partner who made the contract can be pursued
Explanation
In a general partnership partners have unlimited personal liability for the firm's debts. Once firm assets are exhausted, creditors can claim against the partners' private assets. Limited liability is not available to ordinary general partners.
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