CAF-4 · Chapter 13 · Question 10 of 10
Under the principle of 'holding out', if a person who is not a partner verbally represents to a third party that they are a partner, and the third party gives credit to the firm based on this, what is the consequence?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) The person is liable as a partner to that third party who gave credit on the faith of the representation.
Explanation
The doctrine of holding out (or estoppel) makes a person who represents themselves as a partner liable to anyone who provides credit to the firm relying on that representation.
More Relations of partners to third parties MCQs
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