Erwin,a partner in Farm Equipment Rentals & Sales,applies for a loan with Garden Valley Bank allegedly on Farm Equipment's behalf but without the authorization of the other partners. The bank knows that Erwin is not authorized to take out the loan. Liability in the event of default will be imposed on

Question

Quizplus · Accepted Answer

Since Erwin applied for the loan without authorization and the bank was aware of this lack of authority, liability in the event of default would fall on Erwin personally, not on the partnership or the bank.

Erwin,a Partner in Farm Equipment Rentals & Sales,applies for a Loan