Accredited Wealth Management Advisor Practice Exam

In the partnership agreement, which statements indicate the status of the partners after David's purchase?

1. Jim is liable for the debt.

2. David is liable for the debt.

3. Only David is liable since he violated their agreement.

4. Only the partnership and David are liable.

The correct answer is: Jim is liable for the debt.

In this scenario, understanding the liability of partners within a partnership agreement is crucial. When David purchases something on behalf of the partnership, the implications depend on how the partnership is structured and the actions taken by the partners, including any agreements among them. In a general partnership, all partners typically share liability for debts incurred by the partnership. This means that if any partner takes action—such as making a purchase—everyone involved may be held accountable for that action. If Jim and David are both partners in the partnership, then Jim can be held liable for debts incurred by David if those debts are related to the partnership's operations. This shared liability is a fundamental principle of general partnerships, where one partner's decisions impact all. If David made a purchase that was unauthorized or against the partnership agreement, it may complicate the liability but does not fully exempt Jim from responsibility, as general partners normally share responsibility for obligations even if one partner acted independently. Therefore, stating that Jim is liable for the debt aligns with the principles of partnership law, which upholds that each partner can be responsible for the partnership's debts. Thus, the assertion that Jim is liable for the debt reflects the shared accountability inherent in partnerships, regardless of individual actions taken, unless explicitly stated otherwise in