Question

LEGAL PRINCIPLE: Every partner in a partnership firm is liable for the acts of every other partner during the course of business of the partnership firm.
FACTUAL SITUATION: A, a partner in the firm XYZ with another partner B takes loan from a bank for the partnership firm. A misuses the fund for his personal use. B is very resourceful person. Can the bank demand the entire money from B?
DECIDE.

• A. No, because A has misused the money for his personal use
• B. Yes, because both are partners in the same firm
• C. No, because B has not taken any loan
• D. No, because B has another partner in his firm

Answer 1

Answer: (B)

Yes, because both are partners in the same firm

Here, every partner in a partnership firm is liable for the actions of every other partner during the course of business of the partnership firm. So, when A took a loan from the bank for the firm, it means it was done during the course of business. Hence, the bank can ask for the money from B in his capacity of the partner of the same firm as that of A.

Hence, B is the correct option.