Welcome To Presentation

On

Partnership Act 1932

Aditi Das

ID: 141-26-549

Section: A

Department of Law

Daffodil International University

Presented By

Problem

X, Y, Z are partners in a trading firm. They decide that no partner shall have the right borrow beyond Rs 20,000 without the consent of other partners, X without consulting Y and Z borrows from W RS 25,000 in the name of the firm and utilized the same in paying of the debts of the firm. Is the firm liable to pay to W? Would it make any difference if W was aware of this restriction?

1

Decision

Part (a): The firm is liable to pay to W because W was unaware of the restriction.

Part (b): The firm is not liable to pay to W because W was aware of the restriction.

The partners of a firm by mutual agreement may extend or restrict the scope of implied authority of any partner. But a third party is not bound by any such restriction unless it has the knowledge  of such restriction. In other words, the firm is liable to third party only if the third party has no knowledge of the restrictions.

Reasoning

Problem 2X and Y agreed to share the profits of a business carried on by all any of them action for all. Z lent Rs 1,00,000 to the firm on the condition that he will take 25% share in profits. Can Z regarded as a partner?

Decision

No, Z Can not regarded as a partner.

Because Sharing of profit which is a prima facie evidence, exists, but the mutual agency relationship among X, Y and Z which is a Conclusive evidence, does not exist.

The partnership is determined from the real relation between partners and such relation must show the existence of mutual agency relation, and the sharing of profit is prima facie evidence but not a conclusive test of partnership.

Reasoning

The real relation between the partners shows that all essential elements of partnership are present, but in this case mutual agency does not exist.

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