Liability for holding out as partner - PA 1890 s. 14
Holding out as partner: liability for credit given on faith of representation. Continued use of deceased partner's name alone does not make estate liable.
Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made. Provided that where after a partner’s death the partnership business is continued in the old firm’s name, the continued use of that name or of the deceased partner’s name as part thereof shall not of itself make his executors or administrators estate or effects liable for any partnership debts contracted after his death.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
This section makes a person liable as a partner if they represent themselves as a partner by words or conduct, or knowingly allow others to represent them as such, and someone gives credit to the firm in reliance on that representation. The representation does not need to be made directly to the person giving credit; it can be communicated indirectly. The proviso states that after a partner's death, simply continuing to use the deceased partner's name in the firm name does not by itself make the deceased's estate liable for debts contracted after the death.
The liability under this section is separate from the question of whether a partnership actually exists. It is based on the principle of estoppel: the person held out is prevented from denying they are a partner in order to avoid liability.
When it applies
- A supplier extends credit to a firm after seeing a person's name on the firm's letterhead as a partner, even though that person is not actually a partner.
- A person announces at a business meeting that they are a partner in a firm, and a lender subsequently lends money to the firm based on that representation.
- After a partner dies, the firm continues trading under the old name including the deceased partner's surname, and a new creditor gives credit without knowing of the death.
- A person remains silent when a third party introduces them as a partner, and then the firm places orders on credit with that third party.
- A former partner fails to object after leaving the firm, and the firm continues to use their name on stationery, leading a new customer to rely on that name.
What this section does not say
- This section does not govern the liability of a partner for debts incurred before they joined the firm (see s. 17).
- It does not determine whether a partnership actually exists between individuals (see s. 1 and s. 2).
- It does not cover the liability of a partner for wrongful acts of the firm such as fraud or negligence (see s. 10-12).
- It does not deal with the liability of an incoming partner for existing debts of the firm (see s. 17).
Related sections
That's the law. Now let's settle your problem.
Say what is happening. A neutral mediator hears your side and the other party's, and walks you both to a written agreement. In the advanced settings you can ask for the decision to be reasoned on the Acts of Parliament that apply in England and Wales.
Or open a session directly and invite the other party.
We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.
This page reproduces the text of PA 1890 s. 14 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.