15.
8 Partners’ relationship with outsiders  429
he must account for and pay over to the firm all profits
made by him in that business.’
There is a considerable overlap between this sec­
tion and s.29. However, their effect is not the same.
Under s.30 a partner can be liable merely by compet­
ing with the firm, whether or not he used the firm’s
assets. Under s.29 the partner is liable for using the
firm’s assets, whether or not he is also competing with
the firm.
All rights reserved. May not be reproduced in any form without permission from the publisher, except fair uses permitted under U.S. or applicable copyright law.
Trimble v Goldberg (1906) 95 LTR 163
(Privy Council)
G, T and B were in partnership together. The three
agreed to buy property belonging to one Hollard, this
consisting of land and 5 500 shares in a company,
Sigma Syndicate. T bought the property on behalf
of the firm, but he also took an option to buy other
property belonging to Sigma Syndicate. T invited B to
share in this deal. When G found out about it, a year
later, he sued for a share of the profits.
Held. B and T did not need to share the profits with G.
The purchase of the option was not within the scope
of the partnership’s business. It was not competing
with the firm or the carrying on of a rival business. Nor
did T gain the information upon which he acted in his
capacity as a partner in the firm.
Test your understanding 15.3
1 Can partners contract out of the nine terms
implied by s.24 of the Partnership Act 1890?
2 Can a majority of partners expel a partner?
3 To what extent does a partner own partnership
property?
4 In what ways does property become partnership
property?
5 What three fiduciary duties, which partners owe to
each other, are specified in the Partnership Act?
Are these three duties an exhaustive description of
partners’ fiduciary duties to each other? Can the
duties be contracted out of?
15.8 Partners’ relationship
with outsiders
Copyright 2016. Pearson.
Partners are agents of the firm and of their fellow part­
ners for the purpose of the business of the partner­
ship. They may also incur liability for torts which were
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AN: 1419691 ; MacIntyre, Ewan.; Business Law
Account: s2282621.main.ehost
committed in the ordinary course of the firm’s busi­
ness, or which the other partners authorised them to
commit. In addition, a person who is not a partner can
be liable as if he were a partner on account of his hav­
ing allowed himself to be held out (represented) as a
partner. These important matters need to be examined
in some detail.
15.8.1 Partners as agents
Section 5 of the Act states that:
‘Every partner is an agent of the firm and his other
partners for the purpose of the business of the partner­
ship; and the acts of every partner who does any act for
carrying on in the usual way business of the kind car­
ried on by the firm of which he is a member bind the
firm and his partners, unless the partner so acting has
in fact no authority to act for the firm in the particular
matter, and the person with whom he is dealing either
knows that he has no authority, or does not know or
believe him to be a partner.’
In Chapter 11 we studied the different types of auth­
ority which an agent might have to bind his principal.
We saw that if an agent has actual authority to bind
his principal then the principal will be liable on the
contract which the agent made. (If you have not read,
or have forgotten Chapter 11, it might pay to have a
look at the Key Points at the end.) Section 5 is merely
reflecting common law principles, as the following
analysis shows.
If a partner (A) makes a contract with a third party
(T), with the express or implied agreement of his fel­
low partners (B and C) then A will have actual auth­
ority and consequently B and C will be bound by the
contract.
If A did not have actual authority to enter into a
contract which he has made, B and C will nevertheless
be liable on the contract if A had apparent authority to
make it. This apparent authority would have arisen on
account of B and C having made a representation to
T, that A had authority to make the contract, and on
account of T having acted upon the representation by
making the contract.
If A has no actual authority or apparent authority to
make the contract, we need to consider whether or not
A had what might be called ‘usual authority’ to make
it. The lack of actual authority is likely to have arisen
because it has been agreed between the partners (gen­
erally in the articles of partnership) that A should not
have authority to make certain types of contract on
 430  Chapter 15 Partnership
behalf of the firm. We then need to consider whether or
not the contract made by A was done in relation to the
activities of the partnership business, and ‘for carrying
on in the usual way business of the kind carried on by
the firm’. If not, then B and C will not be liable on the
contract in the absence of actual or apparent authority.
Now we consider the position where A makes a
contract ‘for carrying on in the usual way business of
the kind carried on by the firm’, but where A has been
forbidden by B and C from making such a contract on
behalf of the firm. Section 5 tells us that B and C will
nevertheless be bound by the contract which A made
unless either T did not know or believe A to be a part­
ner in the firm, or unless T knew that A had no author­
ity from B and C to make such a contract. This type
of authority is sometimes called ‘usual authority’. (In
Chapter 11 at 11.2.5 we considered the meaning of an
agent’s ‘usual authority’ and saw that the term could
be used in several different senses and that it is always
best to make clear the sense in which it is being used, if
the sense is not apparent from the context.)
The various scenarios and outcomes of the above
text are summarised in Figure 15.1.
It is important to remember that s.5 only makes a
partner the agent of the firm and his fellow partners as
regards ‘any act for carrying on in the usual way busi­
ness of the kind carried on by the firm of which he is
a member’. The meaning of this was considered in the
following two cases.
Mercantile Credit Co v Garrod
[1962] 3 All ER 1103
P and G were partners in a firm, the main business of
which was repairing cars and letting lock-up garages.
G was a sleeping partner and therefore took no part
in the management of the firm. The partnership
agreement prohibited the buying and selling of cars.
Without G’s knowledge, P contracted to sell a car to a
finance company. P did not own this car and so his act
was a clear breach of contract. The finance company
wanted to make G liable on the contract. The finance
company had previously made several similar con-
tracts with P, each time believing that they were deal-
ing with the partnership. The finance company did not
know of the prohibitions in the partnership agreement.
Held. G was bound by the contract by virtue of s.5.
Making the contract was the doing of an ‘act for car-
rying on in the usual way business of the kind carried
on by the firm’.
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JJ Coughlan Ltd v Ruparelia and others
[2003] EWCA Civ 1057, [2003] All ER (D) 344 (Jul)
(Court of Appeal)
The claimant company had £1 million cash which it
wanted to invest. As part of an incredible scheme the
firm was induced to pay $500 000 to a solicitor, R, who
was acting for some fraudsters. R and the fraudsters
were present at meetings at which the claimant com-
pany was fraudulently induced to part with the money
and R was a party to the fraud. R was in partnership
with one other solicitor, T. In return for the $500 000,
the claimants were meant to receive a risk-free annu-
alised return of 6 000 per cent. A contract made by
the claimants with both R and the fraudsters guaran-
teed that the $500 000 would be returned if the claim-
ants did not receive $2.5 million from a bank within
one month. The $500 000 was paid into R’s solicitor’s
account. There was in fact no intention ever to return
this money. The claimants sued for breach of con-
tract and in the tort of deceit. The claim in tort arose
because R guaranteed the claimants that their funds
were protected and that there was no risk to their
money. It was claimed that R’s firm would be liable on
the contract under s.5 of the Partnership Act and for
the tort of deceit under s.10.
Held. There is no difference between the words the
‘ordinary course of the business’ in s.10 Partnership
Act 1890 and the words ‘the usual way of business
of the kind carried on’ in s.5. The key question was
whether R’s acts were the kind or class of acts that
are carried out by solicitors in the ordinary course of
their business. In answering this, the starting point was
to consider whether the general description of the act
falls within the scope of the ordinary course of busi-
ness of solicitors. This requirement has to be satisfied.
So a solicitor selling double-glazing would not bind his
partners under s.5 or make the firm vicariously liable
under s.10. The solicitor’s motive, or the fact that he
was acting honestly or dishonestly, was not relevant.
Then it would be necessary to look at the substance of
the transaction to see whether, viewed fairly and prop-
erly, it is the kind of transaction which forms part of
the ordinary business of a solicitor. This would require
the details of the transaction to be examined, including
its nature and characteristics, and the court should not
be too ready to find the ordinary business requirement
unsatisfied. In this case the firm was not liable under
s.5. The scheme proposed by R and the confidence
tricksters gave a risk-free annual return of 6 000 per
cent. There was nothing normal about the transaction.
The scheme was preposterous and what R did in con-
nection with it could not objectively be viewed as being ➔
 15.8 Partners’ relationship with outsiders  431

Did B and C, expressly or

impliedly, agree with A
that A had authority to
make the contract?

Yes No

A had actual authority. Did B and C represent to T

B and C are bound by the that A had authority to
contract. make the contract?
No

Was the contract: Yes

(i) Made on behalf of the firm;
(ii) The type of contract the firm
would usually make; A had apparent
(iii) Made in the usual way? authority. B and C are
bound by the contract.
No Yes

B and C are not bound The firm is bound by the contract,

by the contract. (even if B and C had agreed with A
that A should not make the
contract). A had usual authority.

Unless

T knew that A T did not know

had no actual or believe A to
authority. be a partner.

Figure 15.1 The liability of fellow partners (B and C) on a contract which A (a partner) made with T

within the ordinary course of a solicitor’s business. Nor
was there liability under s.10 (see below at 15.8.3) for
the same reasons. The nature of the incredible scheme
was so far from what R was authorised to do that it
could not be regarded as having been done in the ordi-
nary course of his business as a solicitor. Therefore,
R’s firm could not be liable under s.5 or s.10.
COMMENT (i) Dyson LJ, who gave the only signifi-
cant judgment, said the fact that the R made a number
of false statements to the claimants is not some-
thing which it is in the ordinary course of a solicitor’s
business to do. But if the scheme had been other-
wise unremarkable the defendant firm could not have
escaped liability. But engaging in a preposterous
investment scheme of this kind, which was not at all a
normal transaction, was not, viewed objectively, part
of a solicitor’s business. Therefore R’s acts were not
carried out in the ordinary course of business of the
defendant firm.
(ii) The important question is how the facts reason-
ably appeared to the third party, not what was actually
going on. As Lord Glidewell said in United Bank of
Kuwait v Hammoud [1988] 1 WLR 105, the test was: ➔

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 432  Chapter 15 Partnership
‘On the facts represented to the [third party] would a
reasonably careful and competent person [such as the
third party] have concluded that there was an underly-
ing transaction of a kind which was part of the usual
business of a solicitor?’ In answering this question
both the nature of the act and the way in which it was
carried out would need to be considered in turn.
15.8.1.1 Trading and non-trading firms
There has been much case law on whether a particular
act is carried on ‘in the usual way’ of the firm’s busi­
ness. These decisions have tended to recognise that
partners in all firms have usual authority to do certain
types of acts, and that partners in trading firms have
usual authority to do additional types of acts. A trad­
ing firm is one which necessarily buys and sells goods.
In all firms an individual partner generally has
usual auth­ority to do the following: buy goods for
the partnership to use; sell any goods belonging to
the firm; employ and dismiss employees on the firm’s
behalf; receive payments on the firm’s behalf, and by
so doing release the payer from further obligation;
employ an agent to act for the firm; employ a solici­
tor to take legal action on the firm’s behalf; sign or
endorse cheques in the firm’s name.
In a trading firm an individual partner will ­generally
have additional usual authority to: borrow money on
the firm’s behalf; give the firm’s goods as security for
a loan; accept and issue all types of negotiable instru­
ments on behalf of the firm.
In neither trading nor non-trading firms will a part­
ner have usual authority to execute deeds in the firm’s
name; or give guarantees in the firm’s name; or submit
a dispute to arbitration.
Although a partner, whether in a trading firm or
a non-trading firm, would not normally have usual
authority to execute a deed on the firm’s behalf, the
firm will be bound by a deed executed by one partner
if the other partners gave that partner actual or appar­
ent authority to execute the deed.
Section 7 of the Act is concerned with contracts
which were not made in the ordinary course of the
firm’s business. It states that:
‘Where one partner pledges the credit of the firm for a
purpose apparently not connected with the firm’s ordi­
nary course of business, the firm is not bound, unless
he is in fact specially authorised by the other partners;
but this section does not affect any personal liability
incurred by an individual partner.’
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A partner will pledge the firm’s credit if he orders goods
or services in the firm’s name and indicates to the sup­
plier that the firm will pay the price. If the partner has
been authorised to do this by his fellow partners then
he has actual authority and obviously the firm and fel­
low partners are liable to pay the price to the supplier.
Section 7 seems to suggest that if the partner has no
actual authority then the fellow partners will not be
bound to pay the price to the supplier. However, under
common law principles the fellow partners would be
liable if they had represented to the supplier that the
partner had authority, and had thereby given him
apparent authority. The partner making the contract
will be personally liable on it whether or not the firm
and the fellow partners are also liable.
15.8.1.2 Suing the firm in the firm name
It is possible to sue the firm in the firm name. If judg­
ment is gained against the firm all of the partners
become liable to pay the debt if the firm does not
have enough assets to pay it. A partner who pays will
be entitled to a contribution from his fellow partners.
The contribution made by each partner will generally
be equal, although the court can order unequal con­
tribution where it considers this just and equitable.
Partners also have the right to sue in the firm name.
The fact that a firm can sue and be sued in the firm
name does not indicate that the firm has a separate
legal existence of its own. The rule is merely one of
convenience.
15.8.2 Liability by holding out
Section 14(1) of the Partnership Act provides that:
‘Everyone who by words spoken or written or by con­
duct represents himself, or who knowingly suffers
himself to be represented, as a partner in a particular
firm is liable as a partner to anyone who has on the
faith of any such representation given credit to the
firm, whether the representation has or has not been
made or communicated to the person so giving credit
by or with the knowledge of the apparent partner
making the representation or suffering it to be made.’
Section 14(1) is a form of estoppel. The person who
represented himself as a partner in a particular firm,
or who knowingly allowed himself to be so repre­
sented, will be estopped from denying that the rep­
resentation was true as regards a person who gave
credit to that particular firm on the strength of the

representation. The representation can be made by
words or conduct. An example of holding out can be
seen in D & H Bunny Ltd v Atkins [1961] VLR 31,
where the credit manager of a company let N have
goods on credit because A and N told him that they
had decided to go into partnership together. A was
liable for the price of the goods, even though no part­
nership was ever formed.
A person cannot become liable in tort as a conse­
quence of s.14(1). The section is concerned only with
those outsiders who gave credit to the firm. The rep­
resentation does not need to be made directly to the
outsider who consequently gave credit to the firm. If
A represents to B that he (A) is a partner in a firm and
B tells C, who relies on the representation, A can be
liable to C. However, what is required is that at some
stage the person made liable either represents himself
to be a partner or knowingly allows himself to be rep­
resented as a partner in a particular firm.
Tower Cabinet Co Ltd v Ingram
[1949] 1 All ER 1033
The claimant, Tower Cabinet Company Ltd, sued
a firm for six suites of furniture sold and delivered.
Having gained judgment, the claimant sought to
enforce this against a retired partner, Ingram. Upon
retiring, Ingram had informed persons with whom the
firm had previously dealt that he had retired. However,
he did not advertise the fact of his retirement in the
London Gazette. The remaining partner, now in busi-
ness on his own, had ordered the goods from the
claimant on partnership notepaper which indicated
that Ingram was a partner. Ingram did not know that
this had been done.
Held. Ingram was not liable to the claimants. He had
neither represented himself as a partner or knowingly
allowed himself to be represented as a partner.
Lynskey J: ‘Before the company can succeed in mak-
ing Mr Ingram liable under this section [section 14(1)],
they have to satisfy the court that Mr Ingram, by words
spoken or written or by conduct, represented himself
as a partner. There is no evidence of that. Alternatively,
they must prove that he knowingly suffered himself to
be represented as a partner . . . it is impossible to say
that Mr Ingram knowingly suffered himself to be so
represented.’
Section 14(2) provides that the continued use of
the firm’s name after a partner’s death does not auto­
matically make the deceased partner’s estate liable
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15.8 Partners’ relationship with outsiders  433
for any partnership debts incurred after his death. In
the following case the Court of Appeal considered the
scope of s.14 in some detail.
UCB Home Loans Corp Ltd v Soni
[2013] EWCA Civ 62
S, a solicitor, defrauded UCB of £2.5 million by means
of a conveyancing fraud. S used five mortgages of
properties in his own name as security, but in fact
there was no security. S did the conveyancing him-
self through a solicitor’s practice of which he was the
sole owner. UCB would not lend money to a solicitor
whose own firm was acting on the transaction unless
the practice had at least two partners. Furthermore,
it required the conveyancing to be done by a part-
ner who did not own the properties in question. So
S represented to UCB that the firm in which he was
the sole practitioner had another partner, K, and that
K had done the conveyancing. S also forged K’s sig-
nature on each of the relevant documents. As well as
being a sole practitioner, S also had another practice
in which he was in partnership with K. This practice
worked from a different office with a different address
but both firms had the same name, Soni & Co. UCB
gained a judgment worth £2.4 million against S, but
S had no money to pay. UCB therefore claimed that K
was liable under s.14.
Held. K was not liable. She would only have been
­liable if it could be proved that she knowingly suffered
a representation to be made that she was ‘a partner in
a particular firm’, and that on the strength of the rep-
resentation UCB gave credit to that firm. The firm in
question was the one solely owned by S, that is to say
the one which had borrowed the money from UCB. S
represented that K was a partner in that firm and UCB
relied on that representation. But K did not represent
that she was a partner in that firm, or knowingly allow
herself to be so represented.
COMMENT In the past K had used letterheads which
created the impression that there was one firm called
Soni & Co, which practised from a number of different
addresses. By doing this K held herself out, or know-
ingly allowed herself to be held out, as a partner in
either a single firm called Soni & Co or in a number
of different firms operating from the addresses which
were contained in the letters. However, this did not
mean that K knew that S was holding her out to UCB
as a partner in his sole practice. (The letterheads which
K used did not contain the address of the sole prac-
tice.) When K used the letterheads she took care to
ensure that her personal address and contact details
➔
 434  Chapter 15 Partnership
were on the letters. But when S borrowed the money
from UCB he deliberately concealed any partnership
with K, in case his fraud was discovered. UCB was
unable to prove that it gave the credit on the strength
of a representation that K was a partner in the par-
ticular firm with which UCB dealt, S’s sole practice.
So the representation and the reliance did not match
each other. UCB intended to deal with one particular
firm and so the representation on which it relied had to
be that K was a partner in that firm.
In Revenue and Customs Commissioners v Pal
[2006] EWHC 2016 (Ch), [2006] All ER (D) 480
(Jul), it was held that a person who was not a partner
could not incur liability for VAT by signing a VAT reg­
istration form and claiming to be a partner. Section
14(1) applies only where credit is given and regis­
tering for VAT did not involve the firm being given
credit. Section 14(1) is concerned with private law
trans­actions where credit is given in direct or indirect
­reliance on the representation. As we saw above at
15.2.3, a person who is given the title ‘salaried part­
ner’ might or might not in fact be a partner. However,
such a person will be regarded as having been held out
to be a partner and so can become liable under s.14(1)
to a third party who gives credit to the firm in reliance
on the holding out.
15.8.3 Liability for a partner’s torts
and other wrongful acts
Section 10 provides that:
‘Where, by any wrongful act or omission of any part­
ner acting in the ordinary course of the business of
the firm, or with the authority of his co-partners, loss
or injury is caused to any person not being a partner in
the firm, or any penalty is incurred, the firm is liable
therefore to the same extent as the partner so acting or
omitting to act.’
This section is somewhat similar to s.5, except that it
deals with liability in tort rather than with liability in
contract. In effect it states that fellow partners will be
vicariously liable for the torts of an individual partner
if the individual partner had actual, apparent or usual
authority to commit the act which gave rise to the tor­
tious liability.
In Blyth v Fladgate [1891] 1 Ch 337, for example,
a partner in a firm of solicitors made a loan on behalf
of a client, the loan being secured by a mortgage on a
house. The solicitor was negligent in that he did not
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check that the house was worth at least as much as the
loan. The client lost money as a consequence and all
of the partners were held vicariously liable because
the solicitor had committed the tort while doing an act
which was in the usual course of the firm’s business. In
Arbuckle v Taylor (1815) 3 Dow 160, a partner in a
firm thought that an outsider had stolen from the firm.
He brought a private prosecution, which failed. The
outsider then sued the firm for the torts of ­malicious
prosecution and false imprisonment. The other part­
ners were not liable for these torts because the act
which gave rise to the tort (bringing criminal proceed­
ings against an outsider) was not an act which was
within the usual course of the firm’s business.
Section 10 will not apply where the tort of one part­
ner injures only another partner. Obviously the part­
ner who committed the tort will be personally liable.
Although the position is unclear, it seems likely that
the other partners will not incur liability under the
common law.
In Dubai Aluminium Co Ltd v Salaam and others
[2002] UKHL 48, [2003] 2 AC 366, the House of Lords
fairly recently considered the scope of s.10 in detail.
The case concerned the liability of fellow partners
for a solicitor who had acted dishonestly. The errant
solicitor had set up sham contracts under which the
claimant company had been defrauded out of $50m.
Although the errant solicitor had knowingly assisted in
the fraud, he had benefited only by earning relatively
modest fees for the work he did. His co-partners were
innocent of any dishonesty. The Court of Appeal had
held that the co-partners were not vicariously liable for
the errant solicitor because it was not in the ordinary
course of the business of a solicitor’s firm to plan, draft
and sign sham contracts. The House of Lords reversed
this judgment and held the co-partners liable. The fol­
lowing points can be taken from the judgment.
(1) Lord Nicholls held that the errant solicitor did
not commit a common law tort, such as deceit or
negligence, but that did not prevent him from hav­
ing committed a ‘wrongful act or omission’ within
the meaning of s.10 of the Partnership Act. When
deciding whether or not an act was done in the
ordinary course of a firm’s business the relevant
question was not simply whether the partner was
authorised by his co-partners to do the act he did.
This would ignore the policy behind vicarious
liability of partners – that being in partnership
carries the risk of liability for the wrongful acts of
the agents who carry the business on. ‘Perhaps the

best general answer is that the wrongful conduct
must be so closely connected with acts the part­
ner or employee was authorised to do that, for the
purpose of liability of the firm or the employer
to third parties, the wrongful conduct may fairly
and properly be regarded as done by the partner
while acting in the ordinary course of the firm’s
business.’ The question whether or not this actu­
ally happened is a question of law, not fact, to be
decided with regard to all of the circumstances of
the case and previous decisions. Applying this test
to the facts, the firm was liable for the errant solic­
itor because his acts in drawing up the sham con­
tracts were so closely connected with acts which
he was authorised to do that they could fairly and
properly be regarded as done by him while acting
in the ordinary course of the firm’s business. He
drew up the sham contracts while ‘acting in his
capacity as a partner’ because he was acting on
behalf of the firm, not on behalf of himself or a
third party. He was trying to promote the firm’s
business.
(2) The errant solicitor committed some of the acts
which made him personally liable while acting
as a director of the fraudulent companies. He did
not therefore commit all such acts while acting
within the course of his employment as a partner.
Lord Nicholls said that this did not prevent his
co-partners from being vicariously liable because
the solicitor had committed enough acts to make
himself personably liable while acting within the
course of his employment.
(3) Lord Hobhouse thought that on the facts the
errant solicitor had committed the tort of deceit
in the course of the partnership business and so
the other partners were plainly vicariously liable
under s.10 of the Partnership Act.
(4) Lord Millett said that s.10 of the Partnership Act
was not restricted to common law torts. The sec­
tion is concerned with fault based liability but
this could arise under the common law, a statute
or an equitable wrong. He also said that whether
or not a partner was acting ‘in the ordinary course
of the business of the firm’ was a question of fact,
once it had been legally established that the act in
question was legally capable of being performed
in this way. (He was the only one of the Lords who
saw the question as one of fact.) He saw vicarious
liability as a loss distribution device. A partner or
employer ought to be liable for all the torts which
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15.8 Partners’ relationship with outsiders  435
could fairly be regarded as reasonably incidental
risks to the type of business carried on.
(5) Lord Millett also cleared up confusion about the
meaning of ss.9, 11 and 13 of the Act. Section 9 is
not concerned with the firm’s liability but with the
individual liability of each partner. It makes each
partner jointly liable with the other partners for
any debts and obligations of the firm which were
incurred while he was a partner. Section 11 makes
the firm liable to account for money which was
properly received by the firm but which one of the
partners later misappropriated. Section 13 deals
with the situation where a partner who is also a
trustee misuses trust money. All of the partners are
made liable to restore the money. Neither s.11 nor
s.13 is concerned with vicarious liability, as it would
not be in the ordinary course of the firm’s business
to misappropriate money in the ways which the sec­
tions envisage. But this does not prevent the firm
from being liable to account for the money misused.
In JJ Coughlan Ltd v Ruparelia and others (see above
at 15.8.1) there was no liability under s.10 of the
Partnership Act. In reaching this conclusion regard­
ing s.10 Dyson LJ, who gave the only significant judg­
ment of the Court of Appeal, relied on the extract from
Lord Nicholls’ speech from Dubai Aluminium Co Ltd v
Salaam which is set out in (1) above.
Admissions and representations by partners
An admission or representation made by any partner
concerning the partnership affairs, and in the ordinary
course of its business, is evidence against the firm.
However, this is only the case where the admission
or representation was made with actual, apparent or
usual authority (s.15).
Section 16 states that if an outsider gives a part­
ner notice of a matter relating to the firm’s affairs
this is regarded as notice to the firm. There are, how­
ever, two exceptions: notice to a dormant or sleeping
partner would not be notice to the firm and notice of
a fraud would not be notice to the firm if the notice
was given to the very partner who was committing the
fraud.
Liability of incoming and outgoing partners
Section 17 provides that a partner coming into a firm is
not liable for the pre-existing debts of the firm. It also
provides that a partner retiring from a firm remains
liable for debts which were incurred before his retire­
ment. A retiring partner can only be discharged from