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A, B, C are partners where C is a sleeping partner who retries without giving a public notice. Which of the following is/are true?
- a)C is liable for the subsequent debts incurred by A and B
- b)C is not liable for the subsequent debts incurred by A and B
- c)C’s retirement results in dissolution of partnership
- d)None
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A, B, C are partners where C is a sleeping partner who retries without...
's liability for subsequent debts incurred by A and B depends on the partnership agreement and the laws of the jurisdiction in which the partnership is located.
Explanation:
A sleeping partner, also known as a silent partner, is a partner in a partnership who is not actively involved in the management and day-to-day operations of the business. However, they still have a financial interest in the partnership and share in its profits and losses.
In general, the liability of a sleeping partner for the debts and obligations of the partnership depends on the terms of the partnership agreement and the laws of the jurisdiction in which the partnership is located.
If the partnership agreement explicitly states that the sleeping partner is not liable for the subsequent debts incurred by the active partners (A and B), then option (b) would be true. However, if the partnership agreement does not provide for such an exemption, the sleeping partner may be held liable for the debts incurred by the partnership, including those incurred by the active partners. In such a case, option (a) would be true.
It is important to note that the liability of a sleeping partner may also be limited by the laws of the jurisdiction in which the partnership is located. For example, in some states, sleeping partners may have limited liability protection similar to that of limited partners in a limited partnership. In such cases, the sleeping partner may not be personally liable for the debts of the partnership beyond their investment in the business.
Therefore, option (c) is also partially true, as the liability of the sleeping partner depends on several factors and cannot be determined without considering the partnership agreement and the laws of the jurisdiction in which the partnership is located.
Explanation:
A sleeping partner, also known as a silent partner, is a partner in a partnership who is not actively involved in the management and day-to-day operations of the business. However, they still have a financial interest in the partnership and share in its profits and losses.
In general, the liability of a sleeping partner for the debts and obligations of the partnership depends on the terms of the partnership agreement and the laws of the jurisdiction in which the partnership is located.
If the partnership agreement explicitly states that the sleeping partner is not liable for the subsequent debts incurred by the active partners (A and B), then option (b) would be true. However, if the partnership agreement does not provide for such an exemption, the sleeping partner may be held liable for the debts incurred by the partnership, including those incurred by the active partners. In such a case, option (a) would be true.
It is important to note that the liability of a sleeping partner may also be limited by the laws of the jurisdiction in which the partnership is located. For example, in some states, sleeping partners may have limited liability protection similar to that of limited partners in a limited partnership. In such cases, the sleeping partner may not be personally liable for the debts of the partnership beyond their investment in the business.
Therefore, option (c) is also partially true, as the liability of the sleeping partner depends on several factors and cannot be determined without considering the partnership agreement and the laws of the jurisdiction in which the partnership is located.
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A, B, C are partners where C is a sleeping partner who retries without giving a public notice. Which of the following is/are true?a)C is liable for the subsequent debts incurred by A and Bb)C is not liable for the subsequent debts incurred by A and Bc)C’s retirement results in dissolution of partnershipd)NoneCorrect answer is option 'B'. Can you explain this answer?
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