ExpertEasy2 marksMultiple Choice
ACCA · Question 14 · Corporate and Business Law
In an ordinary partnership governed by the Partnership Act 1890, what is the liability of the partners for the debts of the firm?
In an ordinary partnership governed by the Partnership Act 1890, what is the liability of the partners for the debts of the firm?
Answer options:
A.
Limited to their initial capital contribution.
B.
Joint and several unlimited liability.
C.
Liability is shared equally, up to a maximum of £10,000 each.
D.
Only the managing partner has unlimited liability.
How to approach this question
Recall the fundamental risk of operating as an ordinary partnership.
Full Answer
B.Joint and several unlimited liability.✓ Correct
In an ordinary partnership, the firm has no separate legal personality. Therefore, partners have unlimited personal liability for the debts and obligations of the firm.
Common mistakes
Confusing an ordinary partnership with a Limited Liability Partnership (LLP).
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