Who is a partner by holding out and partnership by estoppel.
Answers
Answer:
Partner by Estoppel : He is a person who by his words (spoken or written) or conduct represents himself as a partner. Such a partner becomes liable to those who advance money to the firm under the impression that he is a partner in the firm.
Suppose Mr. X, is not a partner but he tells Mr.Y that he is a partner in a firm called ABC Enterprises. Under this impression, Mr.Y sells goods worth Rs. 10,000 to the firm. Later on the firm is unable to pay the amount to Mr. Y. In this case, Mr.Y can recover the amount from Mr.X. Here, Mr.X is a partner by estoppel.
(b) Partner by Holding Out : When a person is declared as a partner but he does not deny this fact even after becomming aware of it, he becomes liable to third parties who lend money or credit to the firm on the basis of such a declaration. Such a partner is called as Partner by Holding out.
Suppose, Mr.X tells Mr.Y in the presence of Mr.Z that Mr.Z is a partner in his partnership firm. Mr. Z does not deny it. Later on Mr.Y gives a loan to the firm (where Mr.X is a partner) on the basis of the belief that Mr.Z is a partner in the firm. If the firm fails to repay the loan to Mr.Y then in such a case Mr.Z becomes liable to pay the loan amount to Mr.Y. Here, Mr.Z is a partner by holding out.
Hello !
Partner by holding out:
A partner by holding out means a person who is not a member of firm but allows himself/herself to be represented as a partner. Such person is responsible to person who has given loan to firm on his representation because loan has been given by assuming that he/she is member.
Partner by estoppel:
Partnership by estoppel means that a person who is not technically a partner can be held liable as a general partner would be for any debts and damages owed to a third party.
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