Business partner liability?

[multi power]

If a partner in a business does a deal are other partners legally bound by it?

 

[farmerdan7618]

Partnership agreement or 1890 act?

 

[multi power]

Partnership agreement or 1890 act?

I don't know, sorry

 

[farmerdan7618]

Ok, assuming it is the 1890 act as this is the default position with no partnership agreement.

Each partner acts as an agent of the partnership in the normal course of business, so generally yes, the partnership is bound by the action of the person.

Exclusions apply if that person had no authority to make the action, and the third party was aware of that or didn't believe them to be a partner.

Also excluded if the partner has been restricted in their authority by the partnership, for example, cannot bind a transaction over £1k.

Also excluded if the agreement appears to be unconnected with the normal course of business, unless the partner has specific agreement prior to the action.

If a partnership agreement is in place, you would need to look at the agreement, as that will say what the partnership is bound by.

This can't be taken as specific advice, and I would recommend taking some legal advice if it is more than a nominal amount.

 

[multi power]

Ok, assuming it is the 1890 act as this is the default position with no partnership agreement.

Each partner acts as an agent of the partnership in the normal course of business, so generally yes, the partnership is bound by the action of the person.

Exclusions apply if that person had no authority to make the action, and the third party was aware of that or didn't believe them to be a partner.

Also excluded if the partner has been restricted in their authority by the partnership, for example, cannot bind a transaction over £1k.

Also excluded if the agreement appears to be unconnected with the normal course of business, unless the partner has specific agreement prior to the action.

If a partnership agreement is in place, you would need to look at the agreement, as that will say what the partnership is bound by.

This can't be taken as specific advice, and I would recommend taking some legal advice if it is more than a nominal amount.

Thank you, I'm pretty sure there would be no actual partnership agreement, basically my father promised me something, half of which belongs to my mother, she is unwilling to honer the deal

 

[betweenthelines]

Families, not worth the hassle.

Irrespective of that, no one can give away something they don't own

 

[Goweresque]

Is it a business transaction though?

If Partner A agrees with Person X to sell him a tractor owned by the partnership and a market price is agreed, then I'd suggest that (absent any other partnership agreement saying that all partners must consent to deals done by one of them) Person X would be legally entitled to buy the tractor for the agreed price, even if Partners B & C do not consent. If the market price was way too low they might have some comeback, possibly, but most likely only from Partner A not Person X.

But if Partner A says 'I'll give you this tractor when I retire' thats not a business transaction, and all he can give you is his % share. He cannot give away the other partners shares.

I think it comes down to consideration - for a contract to be legally binding there must be consideration, which is usually money, but can be anything of value that is exchanged for the item in question. If you have agreed no consideration for the thing promised to you then there would be no legally binding contract.

IANAL etc applies to the above.......

 

[Frank-the-Wool]

I believe the term is "Equally and Severally Liable"!