Rani is a friend of Seema who is a partner in a software firm Simplex Solutions. On Seema's
request, Rani accompanies her to a business meeting with Mohan Soft wares and actively
participates in the negotiation process for a business deal and gives the impression that she is
also a partner in simplex solutions. Three months credit is extended to Simplex solutions on the
basis of these negotiations.
On the basis of the given information about Rani, answer the following questions:
(a) Will Rani be liable to the lender if Seema does not make payment to him by the due date?
(b) Specify and explain Rani's role in the aforesaid situation.
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Yes, Rani be liable to the lender if Seema does not make payment to him by the due date.
Explanation:
Partner by estoppel:
- A person is considered a partner by estoppel if he or she gives the impression to others that he or she is a partner of the firm through his or her own initiative, conduct, or behavior.
- Such partners are held liable for the firm's debts because, in the eyes of a third party, they are considered partners, despite the fact that they do not contribute capital or participate in its management.
- Assume Rani is a friend of Seema , who is a partner in a software company called Simplex Solutions.
- Rani attends a business meeting with Mohan Softwares at Seema's request and actively participates in the negotiation process for a business deal, giving the impression that she is also a partner in Simplex Solutions.
If credit is extended to Simplex Solutions as a result of these negotiations, Rani will be obligated to repay the debt as if she were a partner in the firm.
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