Section 28 of IPA : Section 28: Holding Out

Explanation using Example

Imagine John and Alice run a bakery together as partners. One day, Alice tells a supplier that her friend Bob is also a partner, although he is not. Trusting Alice's word, the supplier extends credit to the bakery. Later, when the bakery fails to pay, the supplier learns that Bob was never a formal partner. Under Section 28(1) of the Indian Partnership Act, 1932, Bob could still be held liable for the debt because Alice represented him as a partner, and the supplier gave credit based on that representation.

In another scenario, after John passes away, Alice continues to operate the bakery under the same name "John & Alice's Bakery." According to Section 28(2), John's estate or legal representatives would not be liable for any new debts or obligations incurred by the bakery after John's death, simply because the bakery's name remained unchanged.