This case concerns the authority of partners to bind his fellow partners in any contract or liability incurred by that partner. The authority of a partner to do certain things can come through 3 ways: actual, implied and apparent.
Rule : Lay down the rule regarding the ways in which partners can have authority
- Actual - where an agent may bind his principal to any act which is expressly authorized by his principal to do - either by oral agreement or by terms of the partnership agreement.
* Implied - authority which arises from the status of the particular type of agent involved - something which a third party would regard as normal for an agent to do i.e. does the act relates to the kind of business carried by the firm and does it falls within the usual way of carrying of business.
* Apparent - arises when a principal has held out the agent as having authority to do a particular thing and the third party relies on the representation.
* Thus if the transaction being done by the partner falls into any of the 3 types of authority, the firm will subsequently be responsible for the liability that may arise under that transaction. e.g.: payment of debt, claim for damages etc.
* Also the rule on duration of liability – what happens after death, and for retirement of partner
Apply and Conclude:
* For the first transaction on 24 / 8 - when Tuah ordered RM10, 000 worth of car spare parts; this transaction will bind the firm although he has exceeded the limit of RM5000. That is, although he has no express or actual authority, he is considered to have the implied authority to make that purchase as buying car spare parts can be considered to fall within the kind of business of the firm and it would be usual and normal for a business dealing with cars to purchase car spare parts. However Tuah being a minor, he cannot be sued personally but his portion of profit can be applied to settle the debt
* For the...