The question is on partnership. A partnership is a relationship between two (2) or more persons carrying on a business in common with a view of making profits. This means it is not a separate legal entity. In Ghana, activities are regulated by the Incorporated Private Partnership Act, 1962, Act 152. (1 mark)

• When entering into a contract in the ordinary course of the Firm’s business, a partner acts as the Agent of all the partners, including himself or herself. All partners are liable for such contracts. (1 mark)
• A partner’s authority to act on behalf of the business may be express or implied. The express authority of the partners will be set out in the Partnership agreement. (1 mark)
• If a partner acts outside both his or her express and implied authority, then he or she will be personally liable on the contract. (1 mark)

In this case, Adjato is a sleeping partner who takes no part in the running of the business but is treated as another partner with respect to his liabilities.

• On the other hand, Hilda is a salaried partner, which means that she can run the business. Any act done within the ordinary course of the Firm’s business is binding on all partners, and they are jointly liable for the debts of the business. (2 marks)

In the scenario in the instant case, when Hilda enters into the contract with Johnny, she exceeded the power given to her in the Partnership Agreement.

• However, the Partnership Agreement is not a public document, and Johnny could not be expected to know of any limitation imposed on Hilda’s authority.
• As long as the equipment could be used in the ordinary course of the business, the contract will be binding on both partners. (1 mark)
• When Hilda entered into the contract with Johnny, she is acting in breach of the Partnership Agreement. (1 mark)
• Adjato could be advised to sue for breach of agreement and recover damages for any loss he suffers. (2 marks)

(Maximum 10 marks)