Q.N is not a partner in the firm of A & Co., but he frequently allows customers to believe, through his own conduct and statements, that he is a partner, and never corrects this impression. A customer, C, extends credit to A & Co. specifically because he believes N is a partner and considers N financially reliable. A & Co. later fails to pay C. Can C hold N liable, even though N was never actually a partner?

This is a direct application of the doctrine of 'holding out' under Section 28 — liability as a partner can attach even to a genuine non-partner who represents himself as one.

Step 1 — Identify the doctrine at play. Section 28 provides that a person who, by words or conduct, represents himself (or knowingly permits himself to be represented) as a partner of a firm, is liable as a partner to anyone who has, on the faith of such representation, given credit to the firm.

Step 2 — Check each requirement of Section 28 against the facts. (i) N represented himself as a partner through his own conduct and statements, and never corrected the impression — this satisfies the 'representation' element. (ii) C, the customer, extended credit to A & Co. SPECIFICALLY because he believed N was a partner and considered N financially reliable — this satisfies the 'reliance on the faith of the representation' element.

Step 3 — Does N's actual (non-)partner status matter? No. The whole point of the holding-out doctrine is that liability attaches to a person who is NOT actually a partner, precisely because an innocent third party was misled by his conduct into believing otherwise. N's true status is irrelevant once both elements above are satisfied. …