Question

Bowen and Campbell are partners in operating a store. Without consulting Bowen, Campbell enters into a con- tract for the purchase of merchandise for the store. Bowen contends that he did not authorize the order and re- fuses to take delivery. The vendor sues the partners for the contract price of the merchandise. Will the partnership have to pay? Why? Does your answer differ if Bowen and Campbell are partners in a public accounting firm?Type or paste question here

Answer 1

The partnership will probably have to pay because it is a merchandising firm. That is, if the vendor knows nothing to the contrary, the vendor may assume that Campbell has the right, because of mutual agency, to bind the firm to contracts for the purchase of merchandise.

Under these circumstances, the public accounting firm is not in the merchandising business. Because the purchase of merchandise to be sold is not within the normal scope of the business of this firm, the vendor has no right to assume Campbell is acting as the agent for the partnership. Hence, the firm probably will not have to pay.