Under an ostensible partnership, liability for the actions of the partnership falls on who when a party is deceived or misled?

• A. The deceived party
• B. The party that created the ostensible partnership
• C. The government
• D. A third-party auditor

Answer: (B)

In an ostensible partnership (partnership by estoppel), liability for the partnership’s obligations arises because someone creates the appearance of a partnership and another party relies on that appearance to deal with them. The responsibility falls on the party who created or allowed the ostensible partnership, since they induced the third party’s reliance. If a supplier extends credit or a contract is made based on the belief that a real partnership exists, the creator of that appearance can be held liable for those obligations, even if no actual partnership exists. The deceived party itself is not the one bearing the liability for the partnership’s actions, and typically the government or a third-party auditor isn’t involved in this liability scenario.