Partners hold a fiduciary relation to each other and possess implied authority to act on behalf of the firm in dealings with third parties.
1. Implied Authority: Section 19
The act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. This is the partner's implied authority.
Statutory Restrictions (A partner CANNOT do these without express consent):
- Submit a dispute relating to the business of the firm to arbitration.
- Open a banking account on behalf of the firm in his own name.
- Compromise or relinquish any claim of the firm.
- Acquire or transfer immovable property on behalf of the firm.
- Enter into partnership on behalf of the firm.
2. Doctrine of Holding Out (Section 28)
Under Section 28, anyone who by words spoken, written, or by conduct represents themselves, or knowingly permits themselves to be represented as a partner in a firm, is liable as a partner to anyone who has, on the faith of any such representation, given credit to the firm.
3. Status of Minor in Partnership (Section 30)
Because a minor's contract is void from the beginning (Mohori Bibee), a minor cannot be a partner in a firm. However:
With the consent of all partners, a minor may be admitted to the benefits of partnership. The minor has a right to share profits and inspect accounts, but holds no personal liability for the firm's debts; only their share in the firm's property is liable.