Partner’s Liability
Partners bear personal liability for partnership debts and obligations, regardless of profit-sharing arrangements, potentially facing unlimited liability. Jointly liable, they can claim contributions if payments are disproportionate. Unlike company shareholders, partners have no limited liability, being liable for partnership debts. New partners aren’t liable for prior debts unless agreed or through novation.
Retiring partners remain liable for pre-retirement obligations, but may seek indemnity from remaining partners. They must notify creditors to avoid continuing liability and can be held liable if they’re held out as partners post-retirement. Deceased partners’ estates share liability for partnership debts, with personal creditors having priority.
Partners face joint and several liability for partnership contracts, torts, and civil wrongs, with each partner presumed to be jointly liable unless agreed otherwise. Litigation can proceed against the firm or individual partners, with judgments against the firm binding current partners. Partners are taxed individually on partnership profits and must file personal tax returns accordingly.
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