Thursday, November 21, 2013

Kansallis Finance LTD v. Fern case brief

Kansallis Finance LTD v. Fern case brief summary
659 N.E.2d 731 (1995)

The United States Court of Appeals for the First Circuit certified two questions. The court of appeals asked whether plaintiff corporation had to show that an act was taken at least in part with the intent to serve or benefit defendant partnership for the purpose of applying the doctrine of vicarious liability and whether uninvolved and unaware partners could be liable for authorized conduct of a partner that violated Mass. Gen. Laws ch. 93A.

A partner had provided an opinion letter on partnership letterhead to the corporation in order to induce it to make a loan. The letter contained several intentional misrepresentations concerning the transaction and was part of a conspiracy to defraud the corporation. The partner was convicted of criminal fraud and the corporation was unable to collect its $ 880,000 loss from him. The federal district court had found for the partnership and the corporation appealed, alleging error in the district court's instruction to the jury and findings of law.


  • The court held that a partnership could be liable if there was apparent authority, or if the partner acted within the scope of the partnership at least in part to benefit the partnership. 
  • Where there was neither, there could not be vicarious liability. 
  • The court finally concluded that while an innocent and uninvolved partner might be vicariously liable for the acts of his partner, some further showing of culpability or involvement must be made to justify multiple damages.

The court held that the partnership could be held liable if the partner had apparent authority or if the act was for the benefit of the partnership.

Recommended Supplements for Corporations and Business Associations Law

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