N.Y. Laws » CHAPTER Partnership / ARTICLE Relations of Partners to Persons Dealing With the Partnership
New York Consolidated Laws

N.Y. Partnership Law § 25 (2026)

Partnership bound by partner's breach of trust

✓ text as retrieved May 2026 (this copy records no edition or section history)
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§ 25. Partnership bound by partner's breach of trust.  The partnership
is bound to make good the loss:
  1. Where one partner acting within the scope of his apparent authority
receives money or property of a third person and misapplies it; and
  2. Where the partnership in the course of its business receives money
or property of a third person and the money or property so received is
misapplied by any partner while it is in the custody of the partnership.
Notes of Decisions
Cited in 5 cases, 1990–2019 · leading case: Credit Lyonnais v. Getty Square Assocs., 876 F. Supp. 517 (S.D.N.Y. 1995).
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Credit Lyonnais v. Getty Square Assocs., 876 F. Supp. 517 (S.D.N.Y. 1995). “N.Y. Partnership Law § 25 (2) (McKinney 1988).”
Schuman v. Gallet, Dreyer & Berkey, L. L. P., 180 Misc. 2d 485 (N.Y. Sup. Ct. 1999). “” (Partnership Law § 25.) Section 26 provides that the partners are only jointly liable for all other debts and obligations of the partnership.”
St. James Plaza v. Notey, 166 A.D.2d 438 (N.Y. App. Div. 2d Dep't 1990). “The liability of partners for the contractual liabilities of the partnership is joint and several, each partner is liable for the whole amount of the debt of the partnership, not merely for a proportionate share (see, Partnership Law § 25; Midwood Dev. Corp. v K 12th Assocs.”
Home Sav. of Am., FSB v. Favata, 244 A.D.2d 155 (N.Y. App. Div. 1st Dep't 1997). “funds from plaintiff that were held in its mortgage trust account, that Amoros was an authorized signatory on the mortgage trust account and the head of the firm’s mortgage and real estate closing departments, and that Amoros misappropriated the funds, warrant application of…”
Dawes v. J. Muller & Co., 176 A.D.3d 473 (N.Y. App. Div. 1st Dep't 2019). “Partnership Law § 25 provides that a partnership is liable for a partner's breach of trust; and Partnership Law § 26(a) imposes liability on all partners jointly and severally for a partner's misconduct.”
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