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Partnership Law Act 2019

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

27: Person liable if they represent themselves as partner

You could also call this:

“You might have to pay if you pretend to be a business partner”

If you say you’re a partner in a business, or let others say you’re a partner, even if you’re not, you can get into trouble. This applies whether you say it out loud, write it down, or act like you’re a partner.

If someone believes you’re a partner and gives the business credit (like lending money or providing goods) because of what you said, you’ll be responsible for paying it back just like a real partner would be.

It doesn’t matter if you told the person directly or if they heard it from someone else. You’re still responsible if they believed you were a partner.

This rule applies even if you didn’t know the person was told you were a partner.

There’s another rule (in section 28) that might change how this one works, so you need to check that too.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206019.

Topics:
Business > Industry rules Money and consumer rights > Banking and loans
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26: Improper use of trust property for partnership purposes, or

"Partners aren't usually responsible if one partner wrongly uses trust property in the business"

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28: Continued use of firm name when partner dies, or

"Business can keep its old name after a partner dies without involving their estate in new debts"

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

27Person liable if they represent themselves as partner

  1. This section applies to a person (A) who—

  2. represents themselves as a partner in a firm (whether the representation is made orally, in writing, or by the person’s conduct); or
    1. knowingly allows themselves to be represented as a partner in a firm.

      1. A is liable as a partner of the firm to any person (B) who has, in reliance on the representation, given credit to the firm.

      2. This section applies whether or not the representation has been made or communicated to B by A or with A’s knowledge.

      3. This section is subject to section 28.

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