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

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 1: Understanding Implied Authority.
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.

Step 2: Conclusion.
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.