On admission as a new partner, Ashwin agreed to be liable for the existing debts (referred to as the old debts) of the firm by an agreement signed by all partners including Ashwin.... On admission as a new partner, Ashwin agreed to be liable for the existing debts (referred to as the old debts) of the firm by an agreement signed by all partners including Ashwin. Examine, whether Ashwin will be liable in a suit filed by the creditor against the firm and all existing partners for recovery of the old debt of the firm.
Understand the Problem
The question is asking about the legal implications of Ashwin's agreement to be liable for the existing debts of the firm upon becoming a new partner. It requires an examination of whether he can be held liable in a lawsuit by a creditor for recovering old debts. This involves understanding partnership laws and liability of partners in relation to debts incurred before they joined the partnership.
Answer
Ashwin is liable for old debts as per the signed agreement.
Ashwin will be liable for the old debts of the firm as he agreed to be liable in an agreement signed by all partners.
Answer for screen readers
Ashwin will be liable for the old debts of the firm as he agreed to be liable in an agreement signed by all partners.
More Information
When a new partner joins and agrees to be liable for existing debts, they become legally accountable, in contrast to the general rule where new partners are not automatically responsible for old debts.
Tips
A common mistake is assuming new partners are never liable for old debts, but this changes if they explicitly agree to such liability.
Sources
- A person admitted as a partner into an existing partnership is liable ... - homework.study.com
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