Q2. What Is Meant by Implied Authority of A Partner? Are Third Parties Affected by Restrictions Placed On Such Implied Authority?
Q2. What Is Meant by Implied Authority of A Partner? Are Third Parties Affected by Restrictions Placed On Such Implied Authority?
Q2. What Is Meant by Implied Authority of A Partner? Are Third Parties Affected by Restrictions Placed On Such Implied Authority?
Liability of a partner for acts of the firm Every partner is liable, jointly with
all the other partners and also severally, for all acts of the firm done while he
is a partner. Further, the liability of all the partners is unlimited. By virtue of
joint and several liabilities, a creditor of the firm has several causes of action.
He can sue all partners together, or can sue them separately (in successive
actions if necessary). As between the partners themselves, the partner
paying for more than his share of the liability may claim contribution from the
others according to the terms of the partnership agreement.
Liability of the firm for wrongful acts of a partner Where, by the wrongful act
or omission of a partner acting in the ordinary course of the business of a
firm, or with the authority of his partners, loss or injury is caused to any third
party, or any penalty is incurred, the firm is liable therefore to the same
extent as the partner. The wrongful act may be tort, fraud or negligence. It is
important to note that although the firm is liable to third party for loss caused
to him by fraud committed by a partner, but, as between the partners, as per
section 10, the same must be borne by the partner committing the fraud and
cannot be shared among all the partners. Of course, in the case of loss
caused by tort or negligence of any partner all partners are liable inter-se in
their profit sharing ratio and the firm is liable to the third party as it is liable
in the case of fraud.
Liability of the firm for misapplication by partner Where (a) a partner acting
within his apparent authority receives money or property from third party and
misapplies it, or (b) a firm in the course of its business receives money or
property from a third party, and he same is misapplied by any of the partners
while it is in the custody of the firm, the firm is liable to make good the loss.
Under this section it has been recognized that the firm must be treated as
receiving what any partner receives in the ordinary course of the business of
the firm. Accordingly, if any partner misappropriates any money or property
which he might not receive either in repayment of a debt or as a loan on
account for the firm, the third party can make the firm or any of the partners
liable for the same.