Question

Corbin, a partner in Dentists Orthodontists Clinic, applies for a loan with Evermore Bank allegedly on Doctors' behalf but without the authorization of the other partners. Evermore knows that Corbin is not authorized to take out the loan. If Corbin defaults on the loan, liability for its unpaid amount will be imposed on?

1) Corbin and Doctors, jointly.
2) Corbin only.
3) Doctors only.
4) Evermore only.

Answer 1

If Corbin, a partner in Dentists Orthodontists Clinic, applies for a loan without authorization and defaults on the loan, both Corbin and Doctors will be held liable for the unpaid amount.

Step-by-step explanation:

If Corbin, a partner in Dentists Orthodontists Clinic, applies for a loan with Evermore Bank without the authorization of the other partners, liability for the unpaid amount will be imposed on Corbin and Doctors, jointly.

In this situation, Evermore Bank knows that Corbin is not authorized to take out the loan, but if Corbin defaults on the loan, both Corbin and the other partners (Doctors) will be held liable for the unpaid amount.