Question

Nitin, a partner of a firm dealing in computers gives an order for win worth Rs. $10,000$ in firm's name. Discuss the liability?

• A. The firm is liable to pay Rs. $10,000$
• B. The firm can sale the wine to other
• C. It does not relate to normal business of the firm. The firm will not be bound by it as act is not within implied authority of a partner
• D. The firm is liable to pay Rs. $10,000$ and if firm fails to pay then only Nitin will be liable to pay the amount

Answer 1

The correct option is C It does not relate to normal business of the firm. The firm will not be bound by it as act is not within implied authority of a partner

Implied Authority is the authority that is not conferred by the mutual agreement between the partners and which is not bind on other partners.

This authority is acted on the ordinary course of business and the firm is bound by such authority when the act is done in a normal way of carrying on the firm's business.

These authority is also known as ostensible authority or apparent authority. Since the act is not related to the ordinary business of the firm. The firm is not liable to pay the amount.