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Partnership Law Act 2019

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

23: Liability of firm for partner’s wrongful acts or omissions

You could also call this:

“Partners may be responsible for mistakes made by other partners in their business”

If you are part of a business partnership, you need to know about a rule that protects people outside your partnership. This rule says that if one of your partners does something wrong while working for your business, or with the okay from other partners, your whole partnership might have to take responsibility.

Here’s how it works: Let’s say your partner does something wrong or forgets to do something important. If this happens while they’re doing normal business stuff or if the other partners said it was okay, and someone who’s not in your partnership gets hurt or loses something because of it, your whole partnership could be in trouble. The same thing applies if your partner’s actions cause your business to get a fine or penalty.

In these cases, your partnership would have to make things right, just as if all of you had made the mistake. This means your business might have to pay money to fix the problem or cover any penalties, even if only one partner was directly involved.

Remember, this rule is there to protect people who deal with your business. It means they can trust that the whole partnership will take responsibility if something goes wrong, not just the individual partner who made the mistake.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206012.

Topics:
Business > Industry rules Money and consumer rights > Consumer protection
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22: Liability of partners for firm’s debts and obligations, or

"Partners share responsibility for business debts and obligations"

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24: Misapplication of money or property received for or in custody of firm, or

"Partners must handle other people's money and things carefully"

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

23Liability of firm for partner’s wrongful acts or omissions

  1. This section applies if—

  2. a partner (A) wrongfully acts or omits to do an act while acting—
    1. in the ordinary course of the business of the firm; or
      1. with the authority of A’s partners; and
      2. the wrongful act or omission—
        1. causes loss or injury to any person (other than a partner in the firm); or
          1. results in a penalty being incurred.

          2. The firm is liable for the loss, injury, or penalty to the same extent as A.

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