Partners authority

Partners? authority is very similar indeed to agents? authority, being that each partner has either:
. Actual/ express authority
· Implied authority
· Ostensible/ apparent authority.

A partner described as managing partner (or similar) has implied authority to bind the firm without limits.
If a third party makes a deal with a partner on behalf of the partnership, they are entitled to believe that this partner had the right to bind the partnership in that contract.

Express authority

when the principal/agency relationship is established, the agent is instructed as to what particular tasks are required to be performed and is informed of the precise powers given in order to fulfil those tasks. If the agent subsequently contracts outside of the ambit of their express authority then they will be liable to the principal and to the third party for breach of warrant of authority.

For example an partner in the partnership may be given the express power by the other partners to enter into a specific contract . In such circumstances all the partners would be bound by the subsequent contract, if the partner breach this authority then still all partners are liable in unlimited partnership.

Implied authority

This refers to the way in which the scope of express authority may be increased. Third parties are entitled to assume that agents holding a particular position have all the powers that are usually provided to such an agent. Without actual knowledge to the contrary they may safely assume that the agent has the usual authority that goes with their position.

In Watteau v Fenwick (1893) the new owners of a hotel continued to employ the previous owner as its manager. They expressly forbade him to buy certain articles including cigars. The manager, however, bought cigars from a third party who later sued the owners for payment as the manager?s principal. It was held that the purchase of cigars was within the usual authority of a manager of such an establishment and that for a limitation on such usual authority to be effective it must be communicated to any third party.

Ostensible/apparent authority

This type of authority, which is an aspect of agency by estoppel, can arise in two distinct ways, both of which are similar to creation of agency by estoppels:

Direct Representation :Where a person makes a direct representation that a particular person has the authority to act as their agent without actually appointing them as their agent. In such a case the person making the representation is bound by the actions of the ostensible/apparent agent. The principal is also liable for the actions of the agent where they are aware that the agent claims to be their agent and yet does nothing to correct that impression.
In Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd (1964), although a particular director had never been appointed as managing director, he acted as such with the clear knowledge of the other directors and entered into a contract with the plaintiffs on behalf of the company. When the plaintiffs sought to recover fees due to them under that contract it was held that the company was liable: a properly appointed managing director would have been able to enter into such a contract and the third party was entitled to rely on the representation of the other directors that the person in question had been properly appointed to that position.
Established Pattern of Dealings
Where a principal has previously represented to a third party that an agent has the authority to act on their behalf. Even if the principal has subsequently revoked the agents authority they may still be liable for the actions of the former agent unless they have informed third parties who had previously dealt with the agent about the new situation (Willis Faber & Co Ltd v Joyce (1911)).
If an agent contracts with a third party on behalf of a principal, the agent impliedly guarantees that the principal exists and has contractual capacity. The agent also implies that he or she has the authority to make contracts on behalf of that principal. If any of these implied warranties prove to be untrue then the third party may sue the agent in quasi-contract for breach of warrant of authority. Such an action may arise even though the agent was genuinely unaware of any lack of authority (Yonge v Toynbee (1910)).