Question

Are partners by estoppel held liable for the debts of the firm?

Answer 1

Partnership by estoppel means that a person who is not technically a partner can be held liable as a general partner and would be liable for any debts and damages owed to a third party.

Generally, a partner by estoppel is created when someone is:

• Taking an active role by participating in the management of the company, or
  
• Permitting the company to use his/her name to do business.

Hence, partners by estoppel will be held liable for the debts of the firm, in which the firm has raised by using their names.