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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Jai, Kiran and Lata are partners. Kiran, acting in the ordinary course of the firm's business, takes goods on credit worth Rs 90,000 from a supplier, who is unaware of any restriction. The firm cannot pay. Who is liable to the supplier?

Jai, Kiran and Lata are liable jointly and severally. A partner's act in the ordinary course of business binds the firm, and every partner is personally liable for the firm's acts, so the supplier can recover the Rs 90,000 from any one or all of them.

  1. AOnly Kiran, as he made the contract
  2. BOnly the firm's assets, with no personal liability of partners
  3. CJai, Kiran and Lata jointly and severally, for the firm's actsCorrect
  4. DJai and Lata only, as Kiran acted as their agent

Explanation

Every partner is liable, jointly and severally, for all acts of the firm done while he is a partner. Kiran's act in the ordinary course binds the firm and all partners, so the supplier may proceed against any or all of them. Option a is wrong because liability is not limited to the acting partner.

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