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Tort Liability to Third Parties

Since partners are considered agents of the partnership, a partner’s wrongful act or omission can bind the partnership if the wrongdoing partner has acted within the ordinary course of the partnership’s business. Such liability is referred to as vicarious liability, a term that is also used when a business is liable for the acts of an employee acting within the scope of his or her employment. Moreover, partners in a partnership generally are jointly and severally liable for torts charged against the partnership. Thus, any or all of the partners in a partnership can be sued individually for the entire amount of the injury caused by the partner. For example, if two lawyers form a general partnership, and one lawyer is liable for malpractice, then the person injured by the malpractice may sue the partnership, the lawyer who committed malpractice, and/or the other lawyer in the partnership. In this situation, the person who is injured could chose to sue only the lawyer who did not commit malpractice, since that lawyer is jointly and severally liable for the torts of the other partner acting in the partnership’s business.

Well-planned businesses will usually avoid the seemingly harsh consequences caused by joint and several liability. One of the more obvious solutions is for the partnership to form a limited liability entity, such as a limited liability partnership. Other solutions may be provided in a partnership agreement, such as the inclusion of a provision requiring the wrongdoing partner to indemnify the other partners if the other partners are vicariously liable for the torts of the wrongdoing partner.

Inside Tort Liability to Third Parties