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Hello sir
Sharon and tracy formed a partnership 5 years ago.Two years ago the partnership employed frank as its manager.Sharon and tracy subsequently left much of the day to day work to frank who has let it be known generally that he has become a partner, although he has not.Frank entered into a large contract with a longstanding customer, dorian,who had dealt with partnership previously.
Dorian believed Frank’s claim that he was a partner.
The contract had gone badly leaving a big debt.
Who is liable for the debt?Sir based on the answer i want to ask that all partner will be liable becoz sharon and tracy left much work with frank giving a representation of him being a general partner and not only because dorian believed him to be so
Another question
If any person(non partner) claims to a third party to be a partner of a partnership firm( without the members of the firm representing to be so) and still the third party believed him to be a partner.But in this case the firm will not be liable becoz they have not made any representation.
Right?You ask ‘Sir based on the answer i want to ask that all partner will be liable becoz sharon and tracy left much work with frank giving a representation of him being a general partner and not only because dorian believed him to be so’
The simple leaving of work to a manager does not in and of itself represent that person to be a partner. But where a person has the apparent authority because of their job title, and that person acts within the areas of activity commonly associated with that job, and holds himself out as having such authority, then there would be a good claim that the entire partnership (Sharon and Tracy) should be liable
Your supplementary question is
‘Another question – If any person (non partner) claims to a third party to be a partner of a partnership firm (without the members of the firm representing to be so) and still the third party believed him to be a partner. But in this case the firm will not be liable becoz they have not made any representation.
Right?’It’s not really a matter of Sharon and Tracy making any tacit or formal representation. But if Dorian can show that he has dealt with the firm through Frank in the past and that there has never been any question raised about Frank’s authority, and the contracts have always proceeded to completion, then that would suggest that Sharon and Tracy have tacitly accepted that Frank has the appropriate authority and the firm would be liable
Of course, Sharon and Tracy would then have a right of action against Frank personally to compensate the firm for the amount the firm has had to pay out to Dorian.
(And very good luck to them in that action against Frank!)
OK?
Yes sir
Sir last 2 questions on this topic….
1) If any non partner approaches a third party and claims to be partner of any particular firm(say abc) and if he believes that and enters into a contract with him then FIRM WILL NOT BE LIABLE BECAUSE OF UNREASONABLE BELIEF OF 3RD PARTY….RIGHT?
2) A longstanding or new 3rd party believes a manager or employee to be partner only on the basis of the MANAGER’S representation and not the actual partners…then what?First question … ‘FIRM WILL NOT BE LIABLE BECAUSE OF UNREASONABLE BELIEF OF 3RD PARTY….RIGHT?’
I really don’t know just how realistic it is that a person (not being a partner) would go to an unknown third party and claim to be a partner of a partnership without that third party making at least some rudimentary enquiries about the veracity of the claim.
To quote a line from Jurassic Park, ‘If it can happen, it will happen’ so undoubtedly your hypothetical scenario MUST have happened in the past and WILL UNDOUBTEDLY happen again in the future.
If I apply the principles of agency law to the situation, it seems to me that, where such an arrangement has been entered into by a third party with a non-partner falsely claiming to represent the firm, I would suggest that the rights of a principal (the firm) to honour the activities of a non-authorised agent would be that the firm could either reject the agent’s agreement with the third party or could retrospectively adopt the non-agent’s contract with the third party
And I believe that the above post answers also your second question.
OK?
And I believe that the above post answers also your second question.
Means answer of second question is what you wrote for first oneMy answer was ‘If I apply the principles of agency law to the situation, it seems to me that, where such an arrangement has been entered into by a third party with a non-partner falsely claiming to represent the firm, I would suggest that the rights of a principal (the firm) to honour the activities of a non-authorised agent would be that the firm could either reject the agent’s agreement with the third party or could retrospectively adopt the non-agent’s contract with the third party’
Where a third party enters into a transaction with a non-partner, only that non-partner is liable UNLESS the firm chooses to adopt the actions of the unauthorised agent
Is that better?
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