Article 1818.

Every partner is an agent of the partnership for the purpose of its

business, and the act of every partner, including the execution in the partnership
name of any instrument, for apparently carrying on in the usual way the business of
the partnership of which he is the member binds the partnership, unless the partner
so acting has in the fact no authority to act for the partnership in the particular
matter, and the person with whom he is dealing has knowledge of the fact that he
has no such authority.
An act of the partner which is not apparently for the carrying on of business of the
partnership in the usual way does not bind the partnership unless authorized by the
other partners.
Except when authorized by the other partners or unless they have abandoned the
business, one or more but less than all the partners have no authority to:
(1) Assign the partnership property in trust for creditors or on the assignees
promise to pay the debts of the partnership;
(2) Dispose of the good-will of the business;
(3) Do any other act which would make it possible to carry on the ordinary
business of a partnership;
(4) Confess a judgment;
(5) Enter into a compromise concerning a partnership claim or liability;
(6) Submit a partnership claim or liability to arbitration;
(7) Renounce a claim of the partnership.
No act of a partnership in contravention of a restriction on authority shall bind the
partnership to persons having knowledge of the restriction. (n)
Qualifies the authority of partners.
Authority must be in the usual course of business.
Transactions beyond a partners authority are binding if it is in the usual
course of business because 3rd person is assumed to have no knowledge of
his lack of authority.
When are transactions not binding?
(1) When a transaction is not in the usual course of business and has no
consent from all other partners
(2) When 3rd person had knowledge of the lack of authority of the acting
partner.

Republic of the Philippines

UNIVESITY OF EASTERN PHILPPINES

University Town, Catarman Northern Samar

COLLEGE OF BUSINESS ADMINISTRATION

PROJECT
IN
LAW 321
Prepared by:
Casulla, Ma. Cherry Mel L.
BSBA-Mngt.3

Submitted to:
Atty. Daryl Basiloy