Relations of Partners to Third Parties: Liability of the Firm for Wrongful Acts of a Partner

The firm is liable for the wrongful acts of a partner if the act is committed within the scope of the partner’s apparent authority. Apparent authority is the authority that a third party reasonably believes that a partner has based on the partner’s position within the firm and the firm’s conduct.

For example, if a partner in a law firm makes a false statement to a client, the firm is liable for the statement if the client reasonably believed that the partner had authority to make the statement.

The firm is also liable for the wrongful acts of a partner if the act is committed in the ordinary course of the firm’s business. This is true even if the partner did not have authority to commit the act.

For example, if a partner in a retail store sells a defective product to a customer, the firm is liable for the defect even if the partner did not have authority to sell the product.

Here are some MCQs on the relations of partners to third parties: liability of the firm for wrongful acts of a partner:

  1. Which of the following statements is true?
    • The firm is liable for the wrongful acts of a partner if the act is committed within the scope of the partner’s apparent authority.
    • The firm is liable for the wrongful acts of a partner if the act is committed in the ordinary course of the firm’s business.
    • The liability of the firm for the wrongful acts of a partner cannot be limited by the partnership agreement.
    • All of the above.
    • The answer is (d). All of the above statements are true.
  2. A partner in a law firm makes a false statement to a client about the client’s case. The partner does not have authority to make the statement. Is the firm liable for the statement?
    • Yes, the firm is liable for the statement.
    • No, the firm is not liable for the statement.
    • The answer is (a). The firm is liable for the statement, as the partner made the statement within the scope of the partner’s apparent authority.
  3. A partner in a retail store sells a defective product to a customer. The partner did not have authority to sell the product. Is the firm liable for the defect?
    • Yes, the firm is liable for the defect.
    • No, the firm is not liable for the defect.
    • The answer is (a). The firm is liable for the defect, as the partner sold the product in the ordinary course of the firm’s business.