Partners in a partnership firm have unlimited liability, which means they are personally liable for the debts and obligations of the firm. In case of any shortfall in the firm’s assets, the personal assets of partners can be used to repay the debts. This also implies the basic principle that partnership firm is a not a separate legal entity, where, the liability is limited only to the acts of the corporation.
Section 25 of the Act clearly states that in a partnership firm the firm can be made liable with a joint liability or a severall liability.
The firm is also responsible to third party for the act of the partner when
A wrongful loss has been caused by partner
Misapplication of property by partner
Misapplication of property by partner when property was in firm’s custody.
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