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Liability as a Partner



Under the Partnership Act 1958 (Vic), generally, each of the partners is liable for the debts and obligations of the partnership incurred while he or she is a partner.  In other words, unlike with companies, there is no limited liability (unless the partnership is a limited liability partnership, which are very rare). 


The Act goes into some detail regarding the liability of partners for the debts and obligations of the partnership, including liability for loss or injury caused to a third party and any penalty incurred, as a result of a partner’s wrongful act or omission in the ordinary course of partnership business (or with the authority of his or her co-partners), and the misapplication of money or property paid or given in relation to partnership business.

Liabilities of incoming and outgoing partners


A person who is admitted as a partner into an existing partnership does not thereby become liable to the creditors of the partnership for anything done before he or she became a partner.


A partner who retires from a partnership does not thereby cease to be liable for partnership debts or obligations incurred before his or her retirement.


Procedure against partnership property for a partner's separate judgment debt


If a partner owes money to a third party, the third party can apply for a court order charging the partner's interest in partnership property and profits, and appointing a receiver of that partner's share of profits (whether already declared or accruing) and of any other money which may be coming to him or her in respect of the partnership.  However, the other partner or partners shall be at liberty at any time to redeem the interest charged or in case of a sale being directed to purchase the same.

For more information on the effect of the Partnership Act 1958 (Vic) and on the importance of partnership agreements, see:

See also our articles on structuring and other aspects of business relationships.




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If you would like to discuss any aspect of this article with us, or share your own experiences, please contact Rod Stumbles at +613 8692 7255 or here.




This article provides general information only and is not intended to constitute legal advice.  No lawyer-client, solicitor-client or attorney-client relationship has been created between us.  You must not rely on the contents of this article, whether as an alternative to legal advice from a lawyer or other professional legal services provider or otherwise.  You should not take, discontinue or refrain from taking any action because of your understanding of the contents of this article, including without limitation delay seeking legal advice or disregard legal advice.  If you have any specific questions about any matter, you should engage us or other lawyers or other professional legal services providers to provide you with the necessary advice.  Keep in mind that you may be facing important deadlines so you should not delay in engaging someone to provide you with the advice.

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