Question

Suppose Joe is a partner at a dental firm. Joe engages in a business transaction and binds the partnership to an agreement regarding purchasing X-ray equipment. However, Joe really didn't have authority to bind the partnership to the agreement with the third party X-ray machine company. The third party, however, believes he does have the authority. In this case, who is liable?

1.

The partnership is liable for the obligation in the agreement.

2.

The third party is liable for the obligation in the agreement.

3.

Neither the partnership nor Joe is liable for the obligation in the agreement.

4.

Both the partnership and Joe are liable for the obligation in the agreement.

5.

Joe is liable for the obligation in the agreement.

Which of the following is not a required element of the definition of a partnership?

1.	The partners would be co-owners.
2.	An association.
3.	To carry on a business for a profit.
4.	All of these are elements of the definition of a partnership.
5.	Between two or more legal persons.

Answer 1

Ans 1: D)Both the partnership and Joe are liable for the obligation in the agreement.

Reason: As per the general partnership laws all the partners have the authorithy to bind the partnership in an agreement. So if its done in a normal course of business without any malfide intention then both the partner and the partnership are liable for the obligation in the agreement.

Ans 2:4. All of these are elements of the definition of a partnership.

Reason: Definition of the partnership as defined under the law is association of two or more legal persons with an intention to carry on a business to earn profit and share among themselves as per the agreement in between them and they could be called as co-owners of the business. Thus all the elements are provided in the definition.