Final answer:
During the winding up of a partnership, partners can no longer engage in new business activities. Their role shifts to concluding the partnership's affairs, including asset liquidation and debt payment. Partners continue to be liable for each other's actions until all affairs are settled.
Step-by-step explanation:
During the winding up process of a partnership, the authority of the partners is significantly reduced. Since the main aim of winding up is to terminate the partnership and settle its affairs, the partners are typically prohibited from starting new business activities or undertaking actions that would bind the partnership. Their authority transitions from managing and operating the business to concluding the affairs of the business. This includes collecting and liquidating partnership assets, paying debts and obligations, and distributing the remaining assets to the partners.
However, one disadvantage of partnerships is that partners are individually responsible for the actions of their co-partners. If a partner mismanages funds or incurs debts during the operation of the business, the other partners may still be held liable. This liability continues until the winding up process is completed and all debts are settled. In the instance of a partner's death or departure, the partnership must wind up or reconstitute with new partners, as it cannot continue in its original form.