§ 16308 Liability For Holding Out

This law says that if you act like a partner or let others think you are a partner, you can be held responsible for the partnership’s debts and promises, just as if you really were a partner.

Key Takeaways

•If you claim to be a partner or let someone else claim you are, you can be sued for partnership debts when others rely on that claim.
•Even if you didn’t know you were being shown as a partner, a public statement can still make you liable.
•Just being named in a partnership document doesn’t automatically make you liable; you must actually act or consent to be held out as a partner.

Example

John tells a flour supplier that he is a partner in Sweet Cakes Bakery, even though he isn’t. The supplier delivers flour and expects to be paid by the bakery.

Because John let the supplier believe he was a partner, the supplier can sue John for the money owed, just like the bakery would have to pay. John is treated as if he were a real partner for that debt.

Except with respect to registered limited liability partnerships and foreign limited liability partnerships: (a) If a person, by words or conduct, purports to be a partner, or consents to being represented by another as a partner, in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made, if that person, relying on the representation, enters into a transaction with the actual or purported partnership. If the representation, either by the purported partner or by a person with the purported partner’s consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation. (b) If a person is thus represented to be a partner in an existing partnership, or with one or more persons not partners, the purported partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all of the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all of the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable. (c) A person is not liable as a partner merely because the person is named by another in a statement of partnership authority. (d) A person does not continue to be liable as a partner merely because of a failure to file a statement of dissociation or to amend a statement of partnership authority to indicate the partner’s dissociation from the partnership. (e) Except as otherwise provided in subdivisions (a) and (b), persons who are not partners as to each other are not liable as partners to other persons. (Added by Stats. 1996, Ch. 1003, Sec. 2. Effective January 1, 1997.)

This law says that if you act like a partner or let others think you are a partner, you can be held responsible for the partnership’s debts and promises, just as if you really were a partner.

Key Takeaways

•If you claim to be a partner or let someone else claim you are, you can be sued for partnership debts when others rely on that claim.
•Even if you didn’t know you were being shown as a partner, a public statement can still make you liable.
•Just being named in a partnership document doesn’t automatically make you liable; you must actually act or consent to be held out as a partner.

Example

John tells a flour supplier that he is a partner in Sweet Cakes Bakery, even though he isn’t. The supplier delivers flour and expects to be paid by the bakery.

Key Takeaways

Example

Key Terms

References

§ 16308 Liability For Holding Out

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References