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PARTNER BY ESTOPPEL

MUTHUSAMY (CA FINAL & ACS FINAL) (253 Points)

27 January 2010

PLEASE EXPLAIN WITH EXAMPLE - PARTNER BY ESTOPPEL & HOLDING OUT

IS IT ANY DIFFERENT BETWEEN PARTNER BY HOLODING OUT & ESTOPPEL

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4 Replies

CA. Rajesh P. Ahir (In Service @ PSU) (687 Points)
Replied 01 February 2010

no difference EXAMPLE Mr.A tells to Mr.X that he(A) is partner of PQR partnership Firm. here A holds himself as a partner now A can not deny his own words.

Rajnandan Kumar (Advocate) (21 Points)
Replied 26 July 2014

To understand Partner by Holding out , first we need to understand difference between Partner by estoppel and Partner by holding out : Partner by estoppel -If a person falsely represents himself as a partner of any firm or behaves in a way that somebody can have an impression that such person is a partner and on the basis of this impression transacts with that firm then that person is held liable to the third party. The person who falsely represents himself as a partner isknown as partner by estoppel. Take an example. Suppose in Ram Hari & Co firmthere are two partners. One is Ram, the other is Hari. If Giri- an outsider represents himself as a partner of Ram Hari & Co and transacts with Madhu then Giri will be heldliable for any loss arising to Madhu. Here Giri is partner by estoppel. Partner by holding out -In the above example, if either Ram or Hari declares that Gopal is a partner of their firm and knowing this declaration Gopal remains silent thenGopal will be liable to those parties who suffer losses by transacting with Ram Hari &Co with a belief that Gopal is a partner of that firm. Here Gopal is liable to those parties who suffer losses and Gopal will be known as partner by holding out.