Partenership

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09 January 2016 What is the difference between Partner by estoppel and Partner by holding out?

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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09 January 2016 Partner by estoppel : If a person falsely represents himself as a partner of any firm or behaves in a way that somebody can have an impression that such person is a partner and on the basis of this impression transacts with that firm then that person is held liable to the third party. The person who falsely represents himself as a partner is known as partner by estoppel.

For example. Suppose in A B & Co firm there are two partners. One is A, the other is B. If C- an outsider represents himself as a partner of A B & Co and transacts with D then C will be held liable for any loss arising to D. Here C is partner by estoppel.

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CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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09 January 2016 Partner by holding out -In the above example, if either A or B declares that C is a partner of their firm and knowing this declaration C remains silent then C will be liable to those parties who suffer losses by transacting with A B & Co with a belief that C is a partner of that firm. Here C is liable to those parties who suffer losses and C will be known as partner by holding out.

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