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A partner of a firm that trades in textiles buys a stock of cloth on credit in the firm's name for the firm's business, without consulting the other partners. Nothing in the partnership deed…

Question and options

A partner of a firm that trades in textiles buys a stock of cloth on credit in the firm's name for the firm's business, without consulting the other partners. Nothing in the partnership deed restricts what he may do. What is the legal position?

  1. The partner is personally bound, as the others did not consent

  2. The firm is bound if it is registered with the Registrar of Firms

  3. The firm is bound, as the purchase is within his implied authority

  4. The firm is not bound until the other partners ratify the purchase

Answer and explanation

Correct answer: C - The firm is bound, as the purchase is within his implied authority

Under section 19(1) of the Indian Partnership Act, 1932, an act of a partner done to carry on, in the usual way, business of the kind carried on by the firm binds the firm; buying stock-in-trade for a textile business is such an act, and section 22 is met because it is done in the firm's name. No consent or ratification by the other partners is needed. Registration affects only the firm's right to sue under section 69, not its liability on contracts made by its partners.

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