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<h1>Firm liability for partner misapplication: firm must make good loss when partner misapplies entrusted money or property.</h1> Liability arises where a partner, acting within his apparent authority, receives money or property from a third party and misapplies it, or where a firm in the course of its business receives money or property from a third party and any partner misapplies that money or property while it remains in the firm's custody; in either case the firm is required to make good the loss.