ICAEW BL · Chapter 7 · Question 2 of 10
The partnership agreement of Tern & Co, an accountancy practice, says that no partner may buy equipment costing over £10,000 without the consent of all partners. Partner Delphine buys a £14,000 photocopier from a supplier who knows nothing of this restriction. Is the firm bound?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Yes, because buying office equipment is in the usual course of the firm's business and the supplier did not know of the restriction
Explanation
Under s5 Partnership Act 1890, every partner is an agent of the firm and binds it when carrying on, in the usual way, business of the kind carried on by the firm. The exceptions are where the partner had no authority and the third party knew this, or did not believe they were dealing with a partner. The supplier knew nothing of the internal limit, so the firm is bound. Delphine may have to indemnify her co-partners.
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