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ACCA Applied Skills · Corporate and Business Law (Global) · Corporations and legal personality

Lindqvist & Co is a general partnership in a jurisdiction that follows the traditional common law approach. A supplier is owed 80,000 by the firm, and the firm's assets are insufficient. Which statement is correct about the supplier's claim against the partners?

The supplier can pursue the partners personally. In a general partnership the partners have unlimited personal liability for the firm's debts, and each acts as agent for the others in the ordinary course of business. The firm is not a separate legal person that shields them, unlike a company.

  1. AThe supplier can claim only against the firm's assets, as the firm is a separate legal person
  2. BThe supplier can pursue the partners personally, as general partners have unlimited liability for firm debtsCorrect
  3. CThe supplier can pursue only the partner who placed the order, as other partners are not liable

Explanation

In a general partnership, partners are personally liable without limit for the firm's debts, and each is typically an agent of the others for business within the firm's usual course. The first option wrongly applies corporate separate personality. The third wrongly confines liability to the contracting partner.

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