Every partner in a firm is jointly liable with the other partners for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable for such debts and obligations, so far as they remain unsatisfied.
Joint liability means liability interdependently with the other partners to the joint creditors of the firm but not independent (or several) liability.
It is still normal for persons dealing with a firm to provide that partners shall be jointly and severally liable, however, since this means that, in the event of the bankruptcy of the firm, they would have an equal claim with other separate creditors against the estate of the individual partner, as well as against the joint assets of the firm.
Liability in Torts
A firm can be liable for the general torts of partners, and for the misapplication of money and property of third persons. It can also be vicariously liable for the torts of its employees under the normal common law rules. Every partner is jointly and severally liable for torts committed while he was a partner.
Vicarious liability
The firm is only liable where the partner was acting (i) in the ordinary course of the business of the firm, or (ii) with the authority of his copartners and where (iii) loss or injury is caused to any person not being a partner. In Hamlyn v. John Houston & Co. [1903], a partner of the defendant firm bribed a clerk of a rival firm to disclose confidential information causing that rival firm to suffer loss. The Court of Appeal held the defendants liable for the wrongful act of the partner. It was in the ordinary course of business to obtain information about a trade rival, whether the means employed were legitimate or illegitimate.
Questions.
1) What is the main distinction between sole trader or partnership, on the one hand, and registered company, on the other hand?
2) Give the definition of a partnership.
3) What persons can be partners and what persons cannot?
4) In what situations are partnerships considered illegal?
5) What are the rights of partners?
6) What are the duties of partners?
7) What are partners liable for?
8) What kind of name cannot be used as a name of a partnership?
Find the following sentences in the text.
1) , , , .
2) , .
3) , .
4) , , .
5) , , 20 .
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6) .
7) , , , .
Recite the main points of the text.
Unit 3. Business Organisations
The Registered Company
Words to be remembered.
incorporated company
unlimited liability company
annual audit
limited company
debentures (loan stock)
subsidiary
dispense ...
pursuant to -
trial court
indemnity ,
signatory
nominee
trustee ,
calamitous
legal entity ,
passing off
injunction
free of charge
cancel
promoter
remuneration
to be void ()
unratifiable
discretionary
fiduciary
bribe
breach (, , )
rescind
statutory
Text for reading.
C. The Registered Company
The Companies Act 1985 (CA 1985) provides that any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the registration requirements of this Act... form an incorporated company, with or without limited liability.
