Q: Elaborate the authority of partner to bind the firm ?

 Ans: Principle of Mutual Agency: 


The definition of partnership in Section 4 provides that business is carried by all or any of them acting for all. This phrase indicates the existence of mutual agency. If a person carrying on a business acts not only for himself but for others also they are partners. They are mutually principals and agents of each other. The principle of mutual agency was laid down in Cox v. Hickman, (1860) 8 HL Cas 268.

The court held that the liability of one partner for the acts of his co-partner is in truth the liability of the principal for the acts of his agent. When two or more persons are engaged as partners in trade, each of them has an implied authority from the other to bind all in any others by contracts entered into according to the usual course of business. Every partner, in ordinary course of business, is an agent of other partner. The partner has authority to bind the whole firm according to ordinary usage to trade. The element of mutual agency is the most important factor in determining the true relationship between the persons carrying on any business common between them.

Authority of partner to bind the firm: 
Thus , due to the principle of mutual agency the act of one partner will bind the whole firm and the partner has the authority to bind the whole firm.

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