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ACCA Applied Skills · Corporate and Business Law (Global) · Partnerships

Amara and Bruno trade as a general partnership selling furniture. Without consulting Bruno, Amara signs a contract with a supplier to buy a normal stock of furniture for the firm. The supplier did not know of any restriction on Amara's authority. Which statement is correct?

The firm is bound. A partner acts as agent of the firm when doing things in the usual course of its business, and buying normal stock for a furniture firm qualifies. The supplier knew of no restriction, so Bruno's lack of consent does not affect the supplier.

  1. AThe firm is bound, because Amara acted as an agent of the firm in the usual course of its businessCorrect
  2. BThe firm is not bound, because Bruno did not consent to the contract
  3. COnly Amara is bound, because she alone signed the contract
  4. DThe contract is void unless it is in writing and signed by every partner

Explanation

A partner is an agent of the firm and the other partners when acting in the usual course of the firm's business. Buying stock for a furniture business is such an act, so the firm is bound. Bruno's lack of consent is irrelevant to an outsider who did not know of any restriction.

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