Question

Mr. Singh is in ‘lighting’ business for the post 15 years. To help his friend, Mr Yadav, a beginner he projected himself as a partner before Mohd. Abdul, a whole sale dealer of fancy lights. Mohd. Abdul gave Mr. Yadav the stock without asking for payment and gave him credit limit of one month. Will Mr. Singh be liable to Md. Abdul if Mr. Yadav does not pay him on time ? Classify Mr. Singh’s role here along with an explanation

Answer 1

Answer:

Explanation:Partner by Estoppel refers to Legally binding partnership that may arise where, in fact, no formal partnership agreement is in effect. A person who by conduct or words represent,or allows him or herself Represented , as a partner in a firm is liable for the credit for loan obtained from firm on the basis of such representation presumption of partner.

Answer 2

Mr. Singh can not participate in the management, but still holds unlimited liability.

• The process followed here is Partner by Estoppel.
• It is a legally binding partnership that can arise when there is no formal partnership agreement in place.
• A person who represents, or allows themselves to be represented, is liable to many things.
• As a partner in a firm by conduct or words is liable for the credit for loan obtained from the firm on the basis of such representation presumption of partner.
• The partner makes no capital contributions and does not participate in management, but his liability is unlimited.

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