961 words (4 pages) Essay in Business Law

02/02/18 Business Law Reference this

Last modified: 02/02/18 Author: Law student

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A partner is an agent to his firm. The firm is bound by his conduct as long as it falls within his power as an agent. By referring to decided cases and statutory profisions. What is the power and authority of the partner ?

    1. Power And Authority

The authorities are right to do something or ordering others to do or not do something to achieve certain goals. Meanwhile, power is the ability to influence others to achieve the desired manner.

Element in the authority:

  1. The authority invested in one position. Someone had the authority because of the position occupied, not because of personal characteristics.
  2. The authority is accepted by subordinates. Individuals in positions of legitimate authority to carry out the authority and subordinates obeyed because he has a legitimate right.
  3. The authority used the vertical. Authority flows from top to bottom following the organizational hierarchy.

Partnership Agreement

Partnership agreement can be made in oral or in writing. There are several advantages of having written agreement are; if there is no agreement, chapter IV and V applicable, and proper interpretation of terms in the Act can be done by looking at the intention of all parties based on the agreement.

Things that need to be in the partnership contract (S5 APP 1956) :

    • Name of parties and business address
    • Name of firm and partners
    • Time and manner of dissolution
    • Real partnership
    • Account and capital partnership
    • Companies right death or retirement or a new
    • Business management
    • Expulsion and competition that exists

Relationship Of Partnership And Third Party

The third party is those who deal with partnerships through partners. Partner is a representative or agent of the partnership business. As a representative of a partnership firm, the partners should conduct business partnership based on the powers given to him.

Partners are agents that may act on behalf on the firm.

Firm is the principal, Agents or partners authoritties :

    • Apparent
    • Actual
    1. Legal Arguments

In term of this issues, there are several legal arguments that are interrelated.

    1. S 7 : “If the principal’s words or conduct would lead a reasonable person in the third party position to believe that the agent was authorized to act (a conduct in ordinary business of the firm was done)”

This section is related to Apparent Authority

    1. S.9 : “A partner cannot pledges the credit of the firm for the purpose apparently not connected with the firm’s ordinary course of business”

This section is related to Actual authority

    1. Power Zahir (S7)

Zahir power is the power of a person who in the opinion of those agents other agents that have the power. It has been provided for in section 7 means that each customer or third party dealing with the firms have the right to treat every partner as having the power to act on behalf of the firm contribute.


Agent uses its power to purchase 10 computers for industrial needs. It’s conduct that firm under a power given to each partner. it’s a big complicated.

A partner’s conduct may bind the firm if the following conditions are fulfilled :

    1. The conduct was done for the purpose of partnership’s business.
    2. In the usual way business of the kind carried on by the firm
    3. 3td party knows / believe that he is a partner
    4. 3td party does not know that the partner has no authority to carry on the transaction
    1. Real Power (S8 & S9)

Real power is the power given specifically to the partner by the other partners for the purpose of conducting business unrelated to the ordinary course of business firms.

Section 9 of the AP in 1961 to state where a business partner with the firm for purposes unrelated to the ordinary course of business firms, the firm is not bound unless he was given specifically authorized by other partners.

Section 8 of the AP 1961 provides a firm and all partners are liable for an act or instrument executed on behalf of the firm or in any way that shows intent to bind by a person authorized a partner or partner not.


Based on the legal arguments S7 and S9 that the powers and authority as an agent in partnership with the authority granted authority partners specific permission and trusted by Zahir and real impact on the firm being run. However, these powers are limited to certain conditions that must be fulfilled by these partners. Thus, third parties may be considered an agent as someone who has the right to represent the firm in each of their management and also things that are outside the responsibility of the agent or firm with prior approval. Which this can be strengthened with section 8 AP 1961.

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