RELATIONS OF PARTNERS TO

PERSONS DEALING WITH PARTNERSHIP

§1031.__Partner agent of partnership

1.__Partner as agent.__Each partner is an agent of the partnership for the purpose of its business.__An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority.

2.__Other act binding on partnership if authorized.__An act of a partner that is not apparently for carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership only if the act was authorized by the other partners.

Comment

(This is Section 301 of the Uniform Partnership Act (1997).)

1. Section 301 sets forth a partner's power, as an agent of the firm, to bind the partnership entity to third parties. The rights of the partners among themselves, including the right to restrict a partner's authority, are governed by the partnership agreement and by Section 401.

The agency rules set forth in Section 301 are subject to an important qualification. They may be affected by the filing or recording of a statement of partnership authority. The legal effect of filing or recording a statement of partnership authority is set forth in Section 303.

2. Section 301(1) retains the basic principles reflected in UPA Section 9(1). It declares that each partner is an agent of the partnership and that, by virtue of partnership status, each partner has apparent authority to bind the partnership in ordinary course transactions. The effect of Section 301(1) is to characterize a partner as a general managerial agent having both actual and apparent authority co-extensive in scope with the