Partnership Law Act 2019

Relationship of partners to third persons and to each other - Relationship of partners to third persons

20: Partners bound by acts done or instruments executed on behalf of firm

You could also call this:

"Partners are responsible for actions done for the partnership by someone with permission"

When someone does something or signs a document for a business partnership, it can affect everyone in that partnership. This is true if they use the partnership's name or show that they mean to include the whole partnership. The person doing this must have permission to do so, even if they aren't one of the partners.

For example, if your friend's dad owns a bakery with his business partner, and the partner orders new ovens using the bakery's name, both your friend's dad and his partner would be responsible for paying for those ovens.

But remember, there are some special rules about signing certain types of documents that this doesn't change. These special rules still apply as they did before.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS206006.


Previous

19: Effect of notice that firm will not be bound by acts of partner, or

"What happens when a partner acts against agreed limits on their authority"


Next

21: Partner using credit of firm for private purposes, or

"Partners shouldn't use the business's credit for personal stuff without permission"

Part 3Relationship of partners to third persons and to each other
Relationship of partners to third persons

20Partners bound by acts done or instruments executed on behalf of firm

  1. An act or instrument relating to the business of the firm is binding on the firm and all the partners if it is done or executed—

  2. in the firm’s name or in any other manner that shows an intention to bind the firm; and
    1. by a person who is authorised to do the act or execute the instrument (whether or not the person is a partner).
      1. However, this section does not affect any general rule of law about the execution of deeds or negotiable instruments.

      Compare
      • 1908 No 139 s 9