In the ordinary course of the firm's business, a partner acknowledges an existing firm liability in…
The legal distinction is between evidence of the firm's liability and a partner's authority to make a binding compromise or a litigation admission. Sections 19 and 23…
Choose your answer
In the ordinary course of the firm's business, a partner acknowledges an existing firm liability in correspondence. There is no suit or proceeding and the partner does not offer a settlement. What effect can the acknowledgment have under section 23 of the Indian Partnership Act, 1932?
Answer and explanation
Correct answer D
The legal distinction is between evidence of the firm's liability and a partner's authority to make a binding compromise or a litigation admission. Sections 19 and 23 address those different effects.
Option feedback
Option A
A statement acknowledging liability does not by itself constitute a compromise of a firm claim.
Option B
Acknowledging a liability does not give up an entitlement of the firm.
Option C
No suit or proceeding is pending on these facts. Section 19(2)(e) deals with an admission in a suit or proceeding.
Option D
Section 23 makes an ordinary-course admission or representation concerning the firm's affairs evidence against the firm.
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