Q: My business partner made certain decisions that incurred significant expenses or resulted in loss. Does he bear liability?
A: Partners are authorized to act on behalf of each other, provided that the decisions are made in accordance with the initial agreement or common practice. Thus, even if the decision incurred expenses or resulted in loss, the liability is shared, just as profits are shared. However, if the partner’s decision deviated from the initial agreement or common practice, he alone bears liability for the loss (C.M. 176:10; 178:3).
Nonetheless, since partners are considered shomer sachar on the joint assets, if the partners began working for each other at the same time, some irresponsible losses are still included in the exemption of balav imo (the owner was in his service). However, depending on circumstances, such loss may be ruled as active damage (mazik b’yadayim), which is not covered by this exemption (C.M. 176:8; Pischei Teshuvah 176:13; Mishpat Shalom 176:48; Aruch Hashulchan 176:35).