Unit - 51 : Relations of Partners to Third Parties
Legal & Regulatory Aspects of Banking -
Unit - 51 : Relations of Partners to Third Parties A partner is the agent of the firm for the purpose of the business of the firm . Every Partner plays a dual role in partnership viz Principal and agent .
Partnership is the relation between persons who have agreed to share the profits of a lawful business, carried on by all or any of them acting for all. There is a mutual relation of ' agency ' between the partners.
Any Partner can, by his acts , bind all the partners of the firm .
Every Partner is bound to indemnify the firm for any loss caused to the partnership firm by his fraud in the conduct of the business of the firm.
The partners of the firm can decide their mutual rights and duties and change them from time to time with the consent of all the partners.
The property of the firm has to be held and used by the partners exclusively for the purposes of the business.
The Partners can decide the use of the property by mutual consent.
An act done by a partner to carry on the kind of business done by the firm (in the usual way ) binds the firm . The authority of a partner to bind the firm is called his ' implied authority '.
When a person who is not at all a partner in a firm either represents himself , or knowingly permits himself to be represented ,as a partner in a firm and as a result of this , he induces others to give credit to the firm then he is known as a partner holding out.
In order to bind a firm, the partner must do the activities under the name of the firm and execute the documents on behalf of the firm .
Every Partner is liable jointly with all other partners and also severally for all acts of the firm done while he is a partner. This is a core principle of Partnership Business.