1. MODE OF DOING ACT TO BIND FIRM
1. Implied authority is subjected to Section 22.
2. In order to bind the firm, the act of a partner must be done in a manner mentioned in section 22.
3. According to the provision contained in s 22, for an act falling within the implied authority of a partner, the firm will be bound if the act or instrument done or executed by a partner has been done or executed
- in the name of the firm;
- in a manner expressing or implying an intention to bind the firm.
4. When a partner does an act or executes an instrument in his own name only and not on behalf of the firm, and there appears to be no express or implied intention to bind the firm, the firm will not be bound by that.
5. The third party, in such a case, is deemed to be acting only on the personal credit of the dealing partner, who alone will be liable for such a transaction.
In the case of Jankidas v Sri Kishen Pershad, the supreme court held that It is not sufficient that the principal‟s name should be in some way disclosed, it must be disclosed in such a way that on any fair interpretation of the instrument his name is the real name of the person liable upon the instrument.
2. LIABILITY OF PARTNER FOR ACTS OF THE FIRM
1. The whole of the firm, which means all the partners of the firm become liable for an act of the firm done by any partner.
2. As regards the nature of liability of the partners, S 25 states that every partner is jointly and severally liable for all acts of the firm done while he is a partner.
3. The liability of all the partners is joint and several even though the act of the firm may have been done by one of them.
4. Thus a third party, if he so likes, can bring an action against any one of them severally or against any two or more of them jointly.
In the case of M/s Glorious Plastics Ltd v Laghate Enterprises, it was held that if a partner retires on 1st May 1982 and the act of the firm is done on 1st May 1985, s 25 cannot be applied to make such retiring partner liable for an act done after he has retired.
3. LIABILITY OF THE FIRM FOR WRONGFUL ACTS OF A PARTNER
1. A principal is vicariously liable for the torts and other wrongful acts committed by his agent in the course of the business of agency.
2. Every partner being an agent of the firm for the business of the firm, the same principle has been recognised by the Indian Partnership Act also.
3. It states that where by the wrongful act or omission of a partner, loss or injury is caused to any third party, or any penalty is incurred, the firm is liable therefor to the same extent as the guilty partner.
4. The wrongful acts may be tort, fraud, negligence or misapplication of money or misappropriation of property.
In the case of Hamlyn v John Houston & Co, the court held that although the wrong of inducing breach of contract had been committed by only one of the partners and the other partner had no notice of the same but since the wrong was done in the scope of the authority of the wrongdoing partner, the other partner was also held liable.
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