Partnership Law Act 2019

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

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

You could also call this:

"Partners share responsibility for business debts and obligations"

If you are part of a business partnership, you are responsible for the debts and obligations of the business along with your partners. This applies to any debts or obligations that the business takes on while you are a partner.

If you die while still being a partner, your estate (the money and property you leave behind) is also responsible for paying off any remaining debts or obligations of the business. However, your personal debts must be paid off first before your estate pays for any of the business debts.

Remember, all partners share responsibility for the business's debts together while they are partners. But if a partner dies, their estate becomes separately responsible for their share of any unpaid business debts, after their personal debts are settled.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206010.


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

22Liability of partners for firm’s debts and obligations

  1. Every partner (A) is liable jointly with the other partners for all debts and obligations of the firm incurred while A is a partner.

  2. After A’s death, A’s estate is also severally liable in a due course of administration for those debts and obligations to the extent that they remain unsatisfied.

  3. However, subsection (2) is subject to the prior payment of A’s separate debts.

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