ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships
Lucia, Marco and Nadia are partners in a catering firm. Lucia commits a negligent act in the ordinary course of the firm's business, causing a client a loss of 30,000. Which statement is correct?
The firm and all the partners are liable. A wrongful act, including negligence, committed by a partner in the ordinary course of the firm's business makes the firm answerable, and partners have unlimited personal liability. Marco and Nadia need not have known of the act.
- AThe firm and all partners are liable to the client, because the wrong was committed in the ordinary course of the firm's businessCorrect
- BOnly Lucia is liable, because partners are not liable for each other's negligence
- CMarco and Nadia are liable only if they knew about the act in advance
- DThe firm is liable but the partners' private assets cannot be used
Explanation
A firm is liable for wrongs by a partner committed in the ordinary course of the firm's business, and the partners are liable for them personally. Advance knowledge or approval is not required. Private assets can be reached because liability is unlimited in a general partnership.
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