A person who is not a partner represents himself to a supplier as a partner of a firm, and the supplier gives credit to the firm on the faith of that representation. Under which doctrine of the…
Question and options
A person who is not a partner represents himself to a supplier as a partner of a firm, and the supplier gives credit to the firm on the faith of that representation. Under which doctrine of the Indian Partnership Act, 1932 can the person be made liable to the supplier as a partner?
Holding out
Mutual agency
Ratification
Implied authority
Answer and explanation
Section 28 of the Indian Partnership Act, 1932 embodies the doctrine of holding out, a form of estoppel: a person who represents himself, or knowingly allows himself to be represented, as a partner is liable as a partner to those who gave credit to the firm on the faith of the representation. Mutual agency and implied authority (section 19) explain why acts of actual partners bind the firm, so they cannot make an outsider liable.
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