Question

Todd was a member of Popcorn Partnership. The Popcorn business was not as popular as it had once been, so Todd decided to withdraw from the partnership and duly notified the other members. Popcorn Partnership was an at-will partnership and the members agreed to dissolve the partnership and parted amicably. They posted a notice in the local newspaper of the dissolution of Popcorn Partnership. Ed decided that he would like to stock each room in his huge hotel with a bag of popcorn. Ed had, in the past, conducted business with Todd several times to buy popcorn for special events. Ed did not see the newspaper notice and was not informed of the dissolution of Popcorn Partnership. Ed approached Todd to make a deal. Ed placed an order, gave a substantial down payment to Todd, and received a receipt on Popcorn Partnership stationery from him. Todd left the country with the down payment. The other former members of Popcorn Partnership failed to honor the contract. Ed sued the other former members of Popcorn Partnership. Discuss their potential liability.

Answer 1

Other former members of the partnership firm is not liable to provide any compensation to Ed, because they had no information about the contract between Todd and Ed, and they are not liable for any act of any other partner after dissolution of partnership. With dissolution of partnership, principal agent relationship between the partners and firm too Dissolves. He can only Sue Todd, for concealing the fact that firm has been dissolved, while entering into contact. Any other former partner, having no mutual agency, will not be liable for anything to Ed.