What is meant by 'partner by estoppel'? Explain. - Business Studies

Advertisements
Advertisements
Answer in Brief

What is meant by 'partner by estoppel'? Explain.

Advertisements

Solution

A person can be regarded as a 'partner by estoppel', if he or she through his/her actions or behaviour, leaves an impression on third parties that he or she is a partner in a particular firm. This means that if a person behaves in a manner that makes third parties consider this individual as one of the actual partners, then he or she is regarded as a ‘partner by estoppel’. Such a partner (by estoppel) is actually not a partner, as he or she neither contributes any capital to the firm nor actively participates in the operations of the firm and is not entitled to any share in the firm’s profits or losses. Nevertheless, he or she can be held liable for the debts that the firm owes to third parties. Accordingly, if the funds available to the firm fall short of requirement for the repayment of debts, then the private assets of a partner by estoppel can be used to repay the debts.

Concept: Types of Partners
  Is there an error in this question or solution?
Chapter 2: Forms of Business Organisation - Short Answer Questions [Page 56]

APPEARS IN

NCERT Class 11 Business Studies
Chapter 2 Forms of Business Organisation
Short Answer Questions | Q 5 | Page 56
Share
Notifications



      Forgot password?
Use app×