Partners as Agents of Other Partners

Power of partner to bind the partnership 

 

It is important to note that under the Partnership Act 1958 (Vic), every partner is an agent of the partnership and of his or her other partners for the purpose of partnership business.  This means that generally (subject to exceptions) any partner can incur obligations on behalf of the partnership and the other partners.

 

Even if a partner has no actual authority to bind the partnership, if it reasonably appears to the other party that he or she has authority (ostensible authority), he or she can bind the partnership and his or her partners (unless the other party knows that the partner has no authority or does not believe him or her to be a partner).

If a particular partner does not have a certain kind of authority (or any at all) to bind the partnership, it is therefore sometimes advisable to give written notice of this fact to specific persons or businesses, or generally in the Government Gazette (or both). 

 

Admissions and representations of partners

 

An admission or representation made by any partner concerning the partnership affairs and in the ordinary course of its business is evidence against the partnership.

 

Notice to acting partner to be notice to the partnership

 

Notice to any partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the partnership except in the case of a fraud on the partnership committed by or with the consent of that partner.

For more information on the effect of the Partnership Act 1958 (Vic) and on the importance of partnership agreements, see:

See also our articles on structuring and other aspects of business relationships.

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Contact

If you would like to discuss any aspect of this article with us, or share your own experiences, please contact Rod Stumbles at +613 8692 7255 or here.

 

DISCLAIMER

 

This article provides general information only and is not intended to constitute legal advice.  No lawyer-client, solicitor-client or attorney-client relationship has been created between us.  You must not rely on the contents of this article, whether as an alternative to legal advice from a lawyer or other professional legal services provider or otherwise.  You should not take, discontinue or refrain from taking any action because of your understanding of the contents of this article, including without limitation delay seeking legal advice or disregard legal advice.  If you have any specific questions about any matter, you should engage us or other lawyers or other professional legal services providers to provide you with the necessary advice.  Keep in mind that you may be facing important deadlines so you should not delay in engaging someone to provide you with the advice.