Relation of Partners to

Third Parties
Partners to be an agent of the firms

⚫ A partner can be an agent of the firm for the purpose

of business of the firm.
⚫ Partnership means all partners coming together to
share profits and losses of the firm and carry out
business by all or one on behalf of all.
⚫ It can be deduced from that that a partner is basically
an agent of the firm.
Implied authority of partners as agent of
the firm

⚫ Acts done by partner in usual course of business binds

the firm.
⚫ Section 19(2) of the Indian Partnership Act, 1932,
mentions a list of actions when the authority ceases to
exist.
⚫ Example- opening a bank account on behalf of firm
but in own name, entering into a partnership on
behalf of the firm, transferring of immovable property
belonging to the firm.
Extension and restriction of partner’s
implied authority

⚫ The implied authority of the partner depends upon

the existing contract between the parties of firm.
⚫ For a partner to carry out actions on his own authority,
he needs to have an express authority of a partner by
means of agreement or if the usage or custom of trade
permits him.
Partner’s authority in emergency
⚫ In cases of emergency, a partner has to do all the acts
in his capacity in order to protect the firm from
occurring loss.
⚫ There are certain conditions to this,
⚫ There has to be an emergency situation in existence,
⚫ The partner acted in those lights,
⚫ The act has to be reasonable under those
circumstances.
Liability of a partner for acts of the firm

⚫ Section 25 of Indian Partnership Act, 1932,

⚫ Every partner in the firm can be held jointly and
severally liable for the acts.
⚫ The act must have been done in ordinary course of
business for the firm.
Minors admitted as partners
⚫ A minor cannot be a partner of the firm,
⚫ With the consent of all the partners, a minor, however,
can be given benefits of the partnership.
⚫ A minor in a partnership is only liable for his shares
and not the actions.
⚫ Once the minor attains majority, he can either choose
or deny to be a part of the partnership firm.