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Vansh Dargan   05 June 2021

Extension or restriction of partner's implied authority

In Section 20 of Indian Partnership Act, 1932 it is written that "It may be noted that the above mentioned extension or restriction is only possible with the consent of all the partners. Any one partner, or even a majority of the partners, cannot restrict or extend the implied authority."

My question is that the term 'all partner' mentioned above includes the partner on whom restrictions may be imposed or we don't consider the partner in subject while taking the consent of partners ?


Learning

 4 Replies

Dr J C Vashista (Advocate)     05 June 2021

What sort of restriction i.e., subject matter, is under consideration for slapping on one of the "all partners" ?

The term "all partners" include such partner.

It will be better to consult a local prudent lawyer for appreciation of facts/ documents and professional advise/ necessary proceeding

Sankaranarayanan (Advocate)     05 June 2021

all partners means including the partner who pointing the issue. state the facts of the issues

G.L.N. Prasad (Retired employee.)     05 June 2021

According to my knowledge, implied authority means though the duties and rights are not defined or specified in deed, each and every partner has a right to inspect the books of accounts, demand for a share of his profits, involve himself in business, question the ultravire actions of the other partners, opt for retirement, share losses as stated in deed and represent himself as a partner etc.  

T. Kalaiselvan, Advocate (Advocate)     06 June 2021

Extension and restriction of partner’s implied authority.—The partners in a firm may, by contract between the partners, extend or restrict the implied authority of any partner. Notwithstanding any such restriction, any act done by a partner on behalf of the firm which falls within his implied authority binds the firm, unless the person with whom he is dealing knows of the restriction or does not know or believe that partner to be a partner.

However the implied authority of a partner may be extended or restricted by contract between the parties. The partner can undertake the above-mentioned matters where:

  • He has the specific or express authority of a partner by agreement, or
  • The usage or custom of trade permits him to do so Under the following conditions, the restrictions imposed on the implied authority of a partner by agreement shall be effective against a third party (1). The third party knows about the restrictions and (2). The third-party does not know that he is dealing with a partner in a firm

In an emergency a partner has the authority to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence acting under the similar circumstances s in his own case and such acts bind the firm.

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