Discuss the "situations in which a person who is not partner in fact is liable as if he were partner". Refer to statutory provisions and decided cases.

The Statutory Foundation: Section 28

Section 28(1) provides that anyone who, by words spoken or written, or by conduct, represents himself, or knowingly permits himself to be represented, to be a partner in a firm, is liable as a partner in that firm to anyone who has, on the faith of such representation, given credit to the firm, whether or not he knew that the representation had actually reached the person so giving credit. The section thus creates liability entirely independent of actual partnership status; it is not concerned with whether the person shares profits or exercises mutual agency as required under Section 4, but solely with the impression he has created or allowed to be created, and the reliance placed upon it by an innocent third party. The doctrine is, at its core, an application of estoppel to the law of partnership: just as an owner of goods may be estopped by his conduct from denying a seller's authority to sell where his own words or conduct have wilfully caused another to alter his position on the faith of an apparent authority, a person who has represented himself as a partner is similarly estopped from denying his liability once a creditor has relied upon that representation to extend credit.

Situation One: A Complete Stranger Who Represents Himself as a Partner

The first and most straightforward situation covered by Section 28 is that of a person who has no connection whatsoever with the firm — never having contributed capital, shared profits, or exercised any agency on its behalf — but who nonetheless permits himself to be introduced, described, or referred to as a partner. If a third party extends credit to the firm specifically because he believes this person, perhaps a man of substantial means, to be a partner and therefore personally answerable for the firm's debts, that person becomes liable as though he were an actual partner. The liability here rests purely on the representation and the resulting reliance, without any need to establish that the person ever had any real stake in the business.

Situation Two: A Person Who Knowingly Permits Himself to Be Represented as a Partner

Closely allied to the first situation, but analytically distinct, is the case of a person who does not himself actively assert that he is a partner, but who, being aware that others are describing him as such, does nothing to correct the impression. Section 28 expressly extends to a person who "knowingly permits himself to be represented" as a partner, meaning that silent acquiescence, once knowledge of the representation is established, is sufficient to attract liability. This distinguishes the doctrine from ordinary agency principles, since mere passivity in the face of a known misrepresentation is treated as tantamount to actively making that representation.

Situation Three: A Retired Partner Who Continues to Be Held Out

A retired partner presents a particularly important application of this doctrine. Although a person who has genuinely retired ceases to be a partner in fact, if he continues to allow the remaining partners to represent him, whether by name, conduct, or continued association with the firm's affairs, as still being a member, he remains liable as a partner to any third party who extends credit on the faith of that continuing representation. This situation operates independently of, though often alongside, the separate liability a retired partner bears under Section 32(2) for want of public notice of his retirement; whereas Section 32(2) protects third parties on the basis of an assumed continuity of the firm's constitution absent notice, Section 28 fastens liability specifically because of an active or passive representation of continuing partnership status, regardless of whether the retirement itself has been publicly announced.

Situation Four: A Person Held Out by Others With His Knowledge, Even Without His Own Direct Statement

The doctrine also extends to situations where the representation is made not by the person himself but by the actual partners of the firm, with that person's knowledge and tacit approval. For instance, if the genuine partners of a firm describe a particular individual to prospective creditors as being associated with the firm as a partner, and that individual, aware of this description, takes no steps to disavow it, he becomes liable under the same principle, since his knowing tolerance of the representation is treated as equivalent to making it himself.

The Element of Reliance as the Unifying Requirement

Across all these situations, liability under Section 28 depends critically on the third party having actually given credit to the firm on the faith of the representation in question. Without this element of genuine reliance, no liability arises, however emphatically the representation may have been made, because the doctrine exists to protect those who have altered their position specifically because of the impression created, not to penalise mere loose talk or careless self-description that had no actual bearing on any creditor's conduct.

The Statutory Exception: Section 28(2) and the Deceased Partner's Estate

An important limitation on the doctrine arises in the case of a deceased partner. Section 28(2) provides that where, after a partner's death, the firm's business is continued under the old firm name, the mere continued use of that name, including the deceased partner's name as part of it, does not by itself render his legal representative or estate liable for acts of the firm done after his death. This carve-out recognises that firm names are frequently retained for reasons of established goodwill and commercial continuity, and it would be inequitable to treat this passive, nominal continuity as equivalent to an active or knowing representation of continuing partnership on the part of a deceased person who obviously cannot correct any such impression.

Illustration

Suppose A has no actual connection with a firm run by B and C, but permits himself, with full knowledge, to be introduced to prospective business contacts as a partner of the firm, in order to lend the firm greater credibility. If a supplier, D, extends goods on credit to the firm specifically because he understands A to be a partner and therefore personally liable for the firm's obligations, A becomes liable to D under Section 28(1) as though he were an actual partner, notwithstanding that he never contributed capital or shared profits. Now suppose instead that E genuinely retired from the same firm some months earlier, but continues to visit the firm's premises and allows B and C to describe him to clients as still being associated with the business. If a creditor, F, extends credit believing E to still be a partner, E remains liable to F under the doctrine of holding out, quite independently of whether public notice of E's retirement was given under Section 32(2). Finally, suppose G was a partner in the firm who has since died, and B and C continue trading under the firm's original name, which included G's name as part of its style. G's estate incurs no liability for transactions entered into after his death merely because the old firm name, including his name, continues to be used, by virtue of the exception under Section 28(2).

Concluding Observations

Section 28 thus captures a range of situations — the outright stranger who falsely claims partnership status, the person who silently tolerates being described as a partner, the retired partner who allows himself to continue being held out despite having genuinely left the firm, and persons held out by the actual partners with their own knowing acquiescence — all unified by the equitable principle that a person cannot enjoy the credit and reputation flowing from an apparent partnership status while disclaiming the liability that a genuine creditor has relied upon in good faith. The statutory exception for a deceased partner's estate under Section 28(2) ensures that this expansive principle of estoppel does not overreach into situations where no genuine representation, active or knowing, can fairly be attributed to the person sought to be held liable.