Partnership law Authority

Authority (implied)

Authority arising from usual course of business of that type

Firm liability (apparent authority conditions)

Firm bound if act is usual, third party unaware of lack of authority, and believes partner is a partner

Partner personal liability (no authority)

Partner liable if acting without authority and in breach of agreement

Indemnity between partners

Partner can recover from others if they acted with authority and are sued

Joint liability

Partners jointly liable for contractual debts

Joint and several liability

Partners jointly and severally liable for torts/wrongs

Creditor options

Creditor can sue firm, all partners, or individual partner

Retiring partner (notice)

Must give actual notice to existing clients and Gazette notice to others to avoid future liability

Holding out (requirements)

Representation + reliance + no knowledge of truth

Outgoing partner (assets)

Can force sale of partnership assets if not paid

Dissolution (court order)

Court may dissolve for incapacity, misconduct, loss-making business, or just and equitable grounds

Distribution on dissolution (FULL order)

External creditors

Partner loans

Return of capital

Surplus split