BL – May 2014 – L1 – SA – Q15 – Partnership Law

Understanding the implied authority of a partner in a trading firm.

Question

A partner in a trading firm has the following implied authority EXCEPT:
A. Borrowing money on the firm’s credit
B. Pledging the firm’s goods and assets as security
C. Admission of a new partner
D. Drawing, accepting, transferring, or endorsing negotiable instruments in the name of the partnership
E. Instructing a solicitor to recover debts owed to the firm

Answer

C. Admission of a new partner

Explanation:
While partners have implied authority to carry out activities necessary for the operation of the business, admitting a new partner is a decision that typically requires the express consent of all existing partners.

Tags: Implied Authority, Legal Rights, Partnership
Level: Level 1

Topic: Partnership Law
Series: MAY 2014

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