Question

As per Indian Partnership Act, 1932, the act of a partner carried out in the ordinary course of business is generally considered to be:

• A. binding only on the partner performing the act.
• B. binding on the firm as well as all the partners collectively.
• C. binding on all partners except those who expressly dissent.
• D. non-binding unless approved unanimously by all partners.

Hint:

Think of the firm as a single unit. If one "arm" (partner) shakes hands on a deal related to the business, the whole "body" (the firm and all partners) is committed to that deal.

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
The Indian Partnership Act, 1932, establishes the principle of Mutual Agency. This means that every partner is both an agent and a principal for the other partners.
Step 2: Detailed Explanation:
The law focuses on acts done in the "ordinary course of business":
- Section 18: States that a partner is the agent of the firm for the purposes of the business of the firm.
- Section 19 (Implied Authority): 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.
Because each partner acts as an agent for the rest, any contract or transaction entered into by one partner while performing regular business duties creates a legal obligation for the entire firm and all other partners collectively.
Step 3: Final Answer:
The act is binding on the firm and all partners collectively.