Partnership Authority

Question 1

Partner Actual Authority

Answer 1

Actual authority is the authority a partner reasonably believes they have based on the communications between the partnership and the partner. It can come from the partnership agreement or a vote of the partners. A majority vote of the partners is required to authorize ordinary business; a unanimous vote of the partners is required to authorize extraordinary acts.

Question 2

Business of the Kind

Answer 2

Note that apparent authority is not limited merely to transactions that are in fact within the ordinary course of business for the partnership in question, but extends also to transactions that would apparently be for carrying on business of the kind run by the partnership.

Question 3

Liability of the Partners

Answer 3

A defining characteristic of the general partnership is that each partner is jointly and severally liable (so, one or more partners may be sued) for all obligations of the partnership, whether arising in tort or contract. But the plaintiff must first exhaust partnership resources
before seeking to collect from an individual partner’s assets.

Question 4

Liabilities of Admitted Partners

Answer 4

A newly admitted partner is not personally liable for partnership obligations that arose before their admission. They can only lose the amount of their investment in the partnership.

Question 5

Liabilities of Dissociating Partners

Answer 5

An outgoing or dissociated partner remains liable for obligations arising while they were a partner unless there has been payment, release, or novation. An outgoing partner can also be liable for acts done after
dissociation. Dissociation and the liability