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    Implied Authority

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    Devendra Babu
    A partner has implied authority to carry out acts that are usual for conducting the type of business operated by the firm. This includes borrowing money, purchasing goods, making contracts, selling movable property, issuing receipts, pledging property for loans, receiving payments, and engaging legal services. However, a partner cannot submit disputes to arbitration, open bank accounts in their own name, compromise claims, withdraw suits, admit liability, acquire or transfer immovable property, or enter partnership agreements on behalf of the firm, as these matters have been excluded from a partner's implied authority by law.

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    Implied Authority

    Uploaded by

    Devendra Babu
    917 views4 pages
    A partner has implied authority to carry out acts that are usual for conducting the type of business operated by the firm. This includes borrowing money, purchasing goods, making contracts, selling movable property, issuing receipts, pledging property for loans, receiving payments, and engaging legal services. However, a partner cannot submit disputes to arbitration, open bank accounts in their own name, compromise claims, withdraw suits, admit liability, acquire or transfer immovable property, or enter partnership agreements on behalf of the firm, as these matters have been excluded from a partner's implied authority by law.

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    A partner has implied authority to carry out acts that are usual for conducting the type of business operated by the firm. This includes borrowing money, purchasing goods, making contracts, selling movable property, issuing receipts, pledging property for loans, receiving payments, and engaging legal services. However, a partner cannot submit disputes to arbitration, open bank accounts in their own name, compromise claims, withdraw suits, admit liability, acquire or transfer immovable property, or enter partnership agreements on behalf of the firm, as these matters have been excluded from a partner's implied authority by law.

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    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    917 views4 pages

    Implied Authority

    Uploaded by

    Devendra Babu
    A partner has implied authority to carry out acts that are usual for conducting the type of business operated by the firm. This includes borrowing money, purchasing goods, making contracts, selling movable property, issuing receipts, pledging property for loans, receiving payments, and engaging legal services. However, a partner cannot submit disputes to arbitration, open bank accounts in their own name, compromise claims, withdraw suits, admit liability, acquire or transfer immovable property, or enter partnership agreements on behalf of the firm, as these matters have been excluded from a partner's implied authority by law.

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    of 4

    Implied authority

    Q. What are implied authorities of a partner? What matters have been


    excluded specifically from such authorities by the act.
    1. Introduction:
    Under partnership act 1932 every partner has right to takes part in management of
    business of the firm. Business is carried on by all the partners or any of them acting
    for all the partners. The partner have to exercise their authorities in order to
    conduct the business. The authority of a partner to act be express or implied.
    2. Implied authority:
    Where there is no express agreement, 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. It is
    implied authority.
    3. Form of authority
    Authority may be:
    (i)

    Express or

    (ii)

    Implied

    4. Conditions of implied authority:


    Conditions of implied authority are as under.
    (a)Conditions on behalf of firm:
    Act done by a partner is on behalf of a firm.
    (b)Act done as partner:
    Act done on behalf of firm is done by person as a partner of firm.
    (c) Use the name of firm:
    The act is done in the name of the firm.
    (d)Business objects:
    Act done is for business objects a firm.
    (e)To carry on business:
    The act done relates to the normal business of the firm.
    5. Implied authority of a partner:

    A partner can do the following acts under implied authority.


    (I)

    Borrowing money:

    A partner can borrow money on the credit of the firm


    Case law
    1987 CLC 2541
    It was held that one partner can borrow on credit on the firm if the firm is trading
    firms, and no duty is cast upon the person advancing money to make any further
    enquiry.
    (II)

    Purchasing of goods:

    He can purchase goods for the firm on credit if it is necessary to carry on the
    business.
    Case law
    1998 CLC 1684
    It was held that a partner had no implied authority to bind his firm by opening a
    bank account in his own name.
    (III)

    Contracts:

    He can make contract on behalf of firm.


    Case law
    P. L. D 1966 Lah. 452
    It was held that where a partner enter into contract on behalf of the firm and his
    partner do not object to the contract, the opposite party can not say that the
    contract was entered into by the partner of the firm.
    (IV)

    To sale property of firm:

    He can sale the goods of the firm, (moveable)


    (V)

    Granting the receipt:

    He can issue receipt on behalf of a firm.


    (VI)

    To pledge:

    He can pledge property of firm for loan.


    (VII) To receive money:

    He can receive payment on behalf of firm.


    (VIII) Legal services:
    He can engage solicitor to defend an action against the firm.
    (IX)

    Settlement of accounts:

    He can settle accounts with the persons dealing with the firm.
    6. Acts outside implied authority:
    A partner can not do the following acts.
    (I)

    Submit a dispute to arbitration:

    He cannot submit a dispute relating to the business of the firm for arbitration.
    (II)

    Bank account:

    He can not open a bank account on behalf of the firm in his own name.
    (III)

    Compromise:

    He can not compromise any claim or portion of any claim by the firm.
    (IV)

    Withdrawal of suit:

    He can not withdraw any suit filed by the firm.


    (V)

    Admit any liability:

    He cannot admit any liability in a suit against the firm.


    (VI)

    Acquire immoveable property:

    He cannot acquire any immovable property on behalf of firm.


    (VII) Transfer of immoveable property:
    He can not transfer immovable property belonging to firm.
    (VIII) Agreement:
    He cannot enter in to agreement of partnership on behalf of firm.
    7. Conclusion:
    To conclusion it can be said that, implied authority is an authority of
    partner which binds the firm by his act under law. The scope of implied
    authority is linked with the nature of business of the firm. A partners

    authority is either implied or express. An act done by a partner which


    does not fall within the scope of his implied authority does not bind the
    firm.

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