Jacqui and Penny decided to go into partnership in a small baseball equipment manufacturing firm.Jacqui raised $250,000 start-up funds,in large part on the basis of documents which she forged.These documents purported to show that they owned their factory,when in fact,they merely leased it.Jacqui spent all of the money on herself,and she now has no assets and has been jailed for 10 years.The creditors have contacted Penny and told her they will hold her liable for the loss.
A)Since she was unaware of Jacqui's fraudulent actions,Penny cannot be successfully sued by the creditors.
B)Since Penny is Jacqui's partner,she is vicariously liable for this fraud.
C)Penny is both civilly and criminally liable for Jacqui's behaviour.
D)Since they should have verified independently everything that they were told by Jacqui,the creditors must bear their own losses.
E)Penny can successfully argue volenti non fit injuria in her own defence.

Question

Quizplus · Accepted Answer

As a partner, Penny is responsible for the actions of her partner, even if she was unaware of the fraudulent actions of Jacqui. This is known as vicarious liability. Therefore, Penny can be held liable for the loss incurred by the creditors.

Jacqui and Penny Decided to Go into Partnership in a Small