Ankit, kishore and Shivam are partners in a partnership firm manufacturing Water Coolers.
Recently, Shivam entered into a contract with Mayank for purchase of raw material worthrs
10,00,000 without the knowledge of Ankit and Kishore. Now, Mayank is asking for the payment
and Ankit and Kishore are of the view that only Shivam is liable to make the payment and they
cannot be held liable. Are they correct in refusing the payment? State the related feature of the
partnership form of business organisation.
Answers
Ankit, kishore and Shivam are partners in a partnership firm manufacturing Water Coolers.
Recently, Shivam entered into a contract with Mayank for purchase of raw material worthrs
10,00,000 without the knowledge of Ankit and Kishore. Now, Mayank is asking for the payment
and Ankit and Kishore are of the view that only Shivam is liable to make the payment and they
cannot be held liable. Are they correct in refusing the payment? State the related feature of the partnership form of business organisation.
Explanation:
Are they correct in refusing the payment? State the related feature of the partnership form of business organisation.
Mayank was right in demanding payment from the rest of the partners. Ankit and Kishore were wrong in refusing the payment and they are equally liable though they were not privy to the contract between Shivam and Mayank.
All the partners in general business partnerships have equal legal liability.This means that they are all liable personally for actions brought against the partnership.Every partner is liable not only for their own personal actions, but also for the actions of the other partners in the partnership.