ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships
Hana, Ivor and Jin are partners. The firm is dissolved and its assets are insufficient to pay a trade creditor, Kestrel Ltd, owed 40,000. Hana has little personal wealth. Which statement is correct about Kestrel's rights in a general partnership?
Kestrel can pursue the partners personally because general partners have unlimited liability for firm debts. A partner who pays more than their share can seek contribution from the others, so creditors are not limited to firm assets or equal thirds.
- AKestrel can recover only a one-third share from each partner and no more
- BKestrel can only claim against the firm's assets, not partners personally
- CKestrel must first obtain a court order dissolving the firm
- DKestrel can pursue partners personally, and each partner is liable for the firm's debts, with rights of contribution between themCorrect
Explanation
In a general partnership partners have unlimited personal liability for firm debts incurred while a partner. Under the Global variant's approach, liability is joint (and in some cases several), allowing creditors to pursue personal assets, with partners entitled to contribution from each other. Limiting recovery to a third each or to firm assets ignores unlimited liability.
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