Q: What is an implied authority ?

Ans: 

Section 19:

The act of a partner which is done to carry on, in the usual way , business of the kind carried on by the firm, binds the firm, and is called 'implied authority '.

Example 1:

Azam and Babar are partners. 

The agreement between them does not state anything about who has the authority to purchase goods on behalf of the firm. Azam buys goods in the ordinary course of business of the firm.

Here firm will be liable for the price of the goods because Azam acted within his implied authority.

Example 2: 

Imran and Kamran are working in partnership as chartered accountants.

Said gives Rs 90,000  to Imran for investment in some good security.  Imran dies not tell anything to his co-partner Kamran about it and misappropriates the money. 
Sajid files suit on the firm for the recovery of Rs 90,000.

Sajid will not succeed.  The firm can not be made liable because it is no part of the ordinary business of chartered accountants to receive money to be invested at their direction.

Of course an action will lie against Imran individually.  

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