Partnership Law Act 2019

Relationship of partners to third persons and to each other - Relationship of partners to third persons

21: Partner using credit of firm for private purposes

You could also call this:

"Partners shouldn't use the business's credit for personal stuff without permission"

If you're part of a partnership, it's important to understand how credit can be used. When a partner uses the partnership's credit for something that doesn't seem to be part of the normal business, there are some rules to follow.

First, if a partner uses the partnership's credit for something that doesn't look like it's for the usual business, the partnership isn't responsible for it. This is unless the other partners have given special permission for that partner to do so.

However, even if the partnership isn't responsible, the partner who used the credit might still be personally responsible for what they did.

This rule helps protect the partnership from unexpected debts, but it also means partners need to be careful about how they use the partnership's credit.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206008.


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"Partners are responsible for actions done for the partnership by someone with permission"


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22: Liability of partners for firm’s debts and obligations, or

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Part 3Relationship of partners to third persons and to each other
Relationship of partners to third persons

21Partner using credit of firm for private purposes

  1. This section applies if a partner (A) pledges the credit of the firm for a purpose apparently not connected with the firm’s ordinary course of business.

  2. The firm is not bound unless A is specially authorised by the other partners.

  3. This section does not affect any personal liability incurred by a particular partner.

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