C Reddy (Entreprenuer) (133 Points)
22 July 2015Respected members,
Can a Partnership Firm authorise an employee, e.g Business Development Manager to sign business agreements on behalf of the partnership firm? Would the provisions change if it is an unregistered Partnership firm?
Thanks & regards
Chandana
CA CMA CS Ram Pavan Kumar Melam
(CA)
(6980 Points)
Replied 07 August 2015
As per section 18 of the Indian Partnership Act, 1932, partner to be agent of the firm i.e. legal position of a partner in a partnership firm is an agent.
The general rule is that an agent is not entitled to delegate his authority to another person without the consent of his principal. 'Delagatus non potest delegare' is the maxim which means that a person to whom authority has been given cannot delegate that authority to another.
Only partners being agents signing business agreements on behalf of the firm can bind the firm. No one else other than partners can bind the firm by such agreements. No difference whether registered or unregistered. An unregistered firm cannot sue on a contract with other party of the contract even though contract signed by a partner.
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