Question

Explain why a partnership agreement would specify that all purchases over a certain amount must be approved by all partners.

Answer 1

A partnership agreement should specify all the possible business situations. It should also consider any conflict of issue that may arise between partner. Ideally each parner should have authority to buy and sale of goods or any other monetary agreement. But in case any one partner involve in a transaction involving huge amount of firm's money then there may arise conflict of issue between partners. Hence it is always a good idea that any transaction or purchase involving firm's outflow of money beyond a certain amount should be validated or approved by all the partners. And it also provides a control check for the partnership firm.