How implications of partners being joint and severally

Question

Explain how implications of partners being joint and severally liable?

Answer 1

Implications of partners being joint and severally liable:

1. Each partner is personally liable to creditors to the full extent of his personal assets, regardless of his partnership contribution and share of the profits.

2. Partnership assets are also available to personal creditors of a partner. If a partner becomes insolvent, her share may have to be sold to satisfy the claims of personal creditors, which may lead to winding-up of the partnership business.

3. While, in principle, a partner is only liable for obligations created by the firm while he is a member, the retiring partner can be held liable as a partner if he gives people dealing with the firm cause to believe that he is still a partner and they advance credit on that basis. To free him from liability, a retiring partner must notify all persons who have dealt with the firm and must place an appropriate newspaper advertisement for other persons.