Subject to a contract between the partners, the firm shall indemnify a partner is respect to payments made and liabilities incurred by him.

The correct answer is C. Both A and B.

A partner is liable for all debts and obligations of the firm, even if they were not personally involved in incurring the debt or obligation. However, the firm can indemnify a partner for payments made and liabilities incurred by them in the ordinary and proper conduct of the business, or in doing such act, in an emergency, for the purpose of protecting the firm from loss, as would be done by a person of ordinary prudence, in his own case, under

For example, if a partner pays a supplier on behalf of the firm, the firm would be liable to reimburse the partner for that payment. Similarly, if a partner incurs a liability in order to protect the firm from loss, such as by paying off a creditor, the firm would be liable to indemnify the partner for that liability.

It is important to note that the firm’s obligation to indemnify