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CA Foundation · Business Laws · The Indian Partnership Act, 1932

Anita, Bharat and Chitra are partners. Anita, without consulting the others, buys goods worth Rs 50,000 for the firm's regular business from Gupta Suppliers, who deal in good faith. Bharat objects that he never approved it. What is the legal position?

The firm is liable. A partner is the agent of the firm, and buying goods in the ordinary course of its business falls within her implied authority. Bharat's private objection does not bind a good-faith supplier without notice of any restriction.

  1. AThe firm is not liable because all partners did not consent
  2. BOnly Anita is liable because Bharat objected
  3. CThe firm is liable because Anita acted within her implied authority in the usual course of businessCorrect
  4. DGupta Suppliers can recover only from Chitra

Explanation

A partner's act done in the usual way of business of the kind carried on by the firm binds the firm. Buying goods for regular business falls within implied authority. Bharat's internal objection does not affect a third party who had no notice of any restriction.

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