Partnership Note

(Partner relationship and third party relationship) Partner authority Every partner is considered as an agent of firm. Therefore, the law of agency lies. (The act of partner binds the firm) However, any act of the partner will bind the firm or other partners if its within the partners authority. Authority 1. Actual what is actually stated in the agreement Implied @usual what is normally the authority of a particular partner @ agent. (E.g. within usual authority of an estate agent to receive deposit on behalf of the partnership, its considered as an authority. implied authority arises from the nature of the business. 2. Apparent/ostensible when there has been any representation by the partner through words or conduct that the agent has authority to do particular things to the third party. took to the nature of representation agreement doesnt say so. Condition to be fulfilled in relation of the partner third party to bind the other partners when theres no actual authority. 1. The act must be done for the purpose of the business. - Section 7 of PA (the act of very partner who does any act for carrying on in the usual way business of the kind carried on by the firm and his partners.) - Therefore, the 3rd party cannot assume that a partner has authority to bind the firm in a transaction which is totally foreign with the partnership business - Every partner is unlimited agent, liable as long as the matter has connection with the partnership, he is said to have authority. Osman v. Chan Kang siew - 3 chinese 3 malay partners - They have borrowed money were guaranteed by Chan Chan is one of the partners. - Later, they failed to make payment for the lender ask for it from Chan - Chan made the payment and sued for recovery from other partners. - The other partners admitted except one - Court held that all partners are liable because the loan taken was in fact for the firms