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The firm is liable for contracts made by a partner if he was acting within his express or implied authority. The firm is not bound by the implied authority of a partner if: the third party knows the partner has no express authority, or the partner has no express authority and the third party does not know or believe him to be a partner.
Plz explain these two conditions with an help of example
When dealing with a third party and a partner is acting beyond his authority (acting ultra vires) how could the innocent third party know? So the partner is acting within his apparent authority even though he may have been expressly forbidden to by the other partners.
If the third party believes that he is just dealing with a person and does not know that person is a partner, then the third party cannot claim that he thought he was dealing with a partner.
OK?
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