Authority in a Partnership: When You’re on the Hook Even Without Knowing It

When operating in a partnership, there are many instances when express authorization need not be given to partners to give them authority to bind the partnership. A partner’s authority to bind a partnership depends on the situation. In fact, unless a third party knows the partner with whom they are transacting with knows that the partner does not have authority to act in a certain way, the partnership may be bound by the partner’s actions even without express authority. Therefore, as partner, it is every important to know when you will be bound by your partner’s actions.

A partner’s authority to bind the partnership to transactions is fairly wide. It covers all transactions that are apparent in the ordinary course of the partnership’s business. More specifically, in Florida, which follows the Revised Uniform Partnership Act, a partnership will be bound by the partner’s actions for carrying on in the usual way the partnership business operates, including business of a similar kind carried on by the partnership. The Revised Uniform Partnership Act grants a great deal of authority to all partners. To determine whether or not a partner acted within his authority, and therefore bound the partnership by his decision, will depend not only on the business of the partnership previously, but also the custom of the type of partnership, and whether or not it is predictable that the partnership could, at some point, engage in such a transaction.

While most actions by a partner will bind a partnership, there are instances in which the partner may not have been permitted to engage in certain transactions and activities. This is generally a court-determined issue, and will depend on the custom of the type of business the partnership engages in. If you feel as though a partner has engaged in any action that should not bind the partnership, and has harmed the partnership through such action, you may be able to prove that the partnership should not be bound. When doing so, having a legal team with years of experience assisting business owner could be the difference. Call the Trembly Law Firm, with years of specializing in helping business owners of all size, today at (305) 431-5678 to schedule your consultation.