External Affairs of a Partnership Flashcards
Who is an agent of the partnership?
Every partner.
When can a partner enter into a contract?
Whenever they have the authority to do so.
What types of authority exist?
- Express actual authority
- Implied actual authority
- Apparent authority
What is express actual authority?
Authority coming from the partnership agreement or an ad hoc authorization. It’s explicit.
What is implied actual authority?
A partner’s reasonable belief that an action is necessary to carry out express authority.
- Paying an auction entry fee in order to bid on an item that the partnership expressly authorized the partner to buy.
What is apparent authority?
The authority to act in the ordinary course of business.
Focus is on whether a reasonable person in the third party’s shoes would think the partner had the necessary authority.
If third party knows partner does not have authority, then there’s no apparent authority.
When will a partnership be liable for torts?
When the torts are committed by partners acting within the scope of their partnership.
How will a partnership go about paying its bills?
- With what money the partnership has.
- Jointly and severally by the partners.
When will an incoming partner be liable for the partnership’s debts and liabilities?
When the liability was incurred before they became a partner, to the extent of his capital contributions.
When will an outgoing partner be personally liable?
Pretty much always, it seems. Anything that was incurred after dissolution.
