ACCA LW ^Eng Syllabus D. The Formation And Constitution Of Business Organisations - Explain The Authority Of Partners - Notes ^{3 / 5}

Primarily they have to act in good faith to each other - a fiduciary relationship

However there are some statutory duties too:

1) To disclose all info they have to other partners
2) Account to all partners for any benefits they gain from the partnership
3) Not to compete against the Partnership

Remember Partners are agents of the Partnership

and so have Actual Implied Authority

What this means is that the Partner has authority to bind the partnership in the following situations:

• The partner has actual express authority (obviously)

• It's a transaction for the Partnership

• It's a transaction where the Partner usually has authority

• The partner does NOT have authority, but the 3rd party isn't aware of it

• The Partner does not have authority as he's not even a partner! However the 3rd party are unaware of this

Apart from those situations - if the Partner gets into a deal with no authority to do so he may be sued

However remember that in partnerships all partners are JOINT and severally liable - meaning you're all liable for the partnership debts