Question

Assertion (A): In partnership firm, the private assets of the partners can also be used to pay off the firm's debts. 
Reason (R): The liability of the partners for acts of the firm is limited. 
Choose the correct option from the following:

• A. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
• B. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
• C. Assertion (A) is false, but Reason (R) is true.
• D. Assertion (A) is true, but Reason (R) is false.

Hint:

Understand the fundamental difference between limited and unlimited liability in partnership law. Limited liability applies to LLPs (Limited Liability Partnerships) but not to regular partnerships.

Answer 1

The Correct Option is D

In a partnership firm, partners bear unlimited liability, meaning their personal assets are accessible for the firm's debt settlement if firm assets are inadequate. Nevertheless, the assertion in Reason (R) is factually incorrect as partner liability is unlimited, not limited.