Acting as a partner in the ordinary course of business binds the partnership unless there is no particular authority given to the partner to act on behalf of the partnership and proper notification has been given to the person with whom the partner is supposed to be dealing with.
This notification serves as a warning notice that this partner lacks the proper authority to bind the partnership and you should take proper caution when dealing with him.
However, an act of a partner who’s not supposed to make deals for the partnership is legitimate and fully supported by the partnership if this act was previously authorized by the other partners. Ratifying the action of this partner whether he acted without actual or apparent authority makes the partnership liable for any damages.
Generally, a partner will bind the partnership and the other partners if his acts exhibit actual, express, implied and apparent authority.
Obviously, there is no apparent authority when the third party is aware that this person’s action lacks authority or that it requires the unanimous consent from all partners.
Determining the scope of authority requires some common sense by studying how the partnership has functioned in the past as well as other similar businesses in the same niche.
Click here for “Agency Law” concepts from Wikipedia. It might help you understand better what I’m talking about.
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