Exceptions - authority of partners, Business Law and Ethics

Exceptions - Authority of Partners

The rule stated is a general rule, such there are a few exceptions for it.  Hence the chief of these exceptions are as follow: like;

(a) A contract is made through a partner with a third person and such third person is unaware of the partnership of the existence, so the other partners cannot be bound then provided they have forbidden such the contracting partner for act to them.

(b) A partner executes a deed, so neither the other partners nor the firm will be bound unless the contracting partner was himself prearranged authority through a deed like i.e. a power of attorney.  Although this is in accordance about the Law of Agency.

(c) The authority of a partner has been cancelled through the other partners, so and such particular partner purports to contract regards a third party so the third party concerned cannot hold such firm liable whether he knew of the cancellation of authority then like the firm can be held liable.

(d) A partner, without special authority, presented a guarantee or signs like a bill of exchange or endorses or makes a promissory note, or pledges goods or  borrows money -  like in the name of the firm - so hence the firm will not be bound as these acts are not in the customary course of the business of the firm. Whether with a trading firm, any partner may bind the firm on bills of exchange however, promissory notes, or on a contract for borrow money on behalf about the firm.  Make in mind that this applies to trading firms barely i.e. like  firms whose business is the selling  or buying of goods.

Higgins v. Beauchamp: moreover beau champs and X carried at a partnership business as managers and owners of cinemas.  However the articles of partnership forbade the partners for borrow money on the firm's behalf. Although must X borrowed money from Higgins on the firm's behalf.  But firm was held never liable, like it was not a trading firm; X had thus no implied authority for borrow on the firm's behalf there.

Posted Date: 1/30/2013 7:24:33 AM | Location : United States







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