Part B
The liability of partners in the partnership firm is different from the liability of an
individual in the company. When the partner or an individual comes into a contract with the
other party than the liability differs of partner in the partnership firma with the individual of the
company.
Limitation of partner in a Partnership as compared to individual of company for the
contracts entered into with outside parties
According to Partnership Act 1963, the liability of the partner that he will be jointly and
severally liable for the contracts conducted during its operations. However, the director of
company solely will be responsible for his acts. In Gabriel Castle Jackson Advertising v Volume
Sales (Finance1) case, it was held that the contract was made for the finance the concert to earn
the profits. Therefore the court had ruled that the contract made with the other the other party.
The court ruled that the sharing of profits will be with all the partners2.
The creditors in this have the right to sue all partner or any partner individually but in company
creditor can sue the company but not the owners of the company. In case Checker taxicab Co Ltd
v Stone case3, it is stated by the Court that the profits are shared according to the agreement made
between the parties in the partnership deed. The third party has the right to sue to any of the
partners either involved while making the contract or making of contract.
The partner can been held liable for the wrong actions of the other partner but in the company
the partner will not been held liable for the actions of the other partner. Each and every partner
will be personally liable for their acts and others partners of the firm will not be liable for the act
done by the other partner in their personal interest. Any wrongful act of any of the partners can
impose the penalties on all partners but in the company the responsibility will be on the
company. The receiving of the money by any of the partners have the liability of money
collected mutually but in case of company,owners of company work like employees and they are
being paid salary for their work. The liability of the partner is unlimited when entered into a
1 [1974] HCA 22
2 Geoffrey Morse., Partnership Law (Oxford, 2010)
3 1930 NZLR 169

Partnership vs. Company Liability: A Comparative Analysis (LAWS20059)