In relation to law governing partnerships, explain the legal position in a cases where, The liability of the firm in torts committed by one partner
Liability of the firm in torts committed by one partner
Where a partner commits a tortuous act, the remaining partners are jointly and severally liable with him, provided they authorised the act either expressly, or by implication, where the act was done within the ordinary course of the firm’s business. This is as provided in Section 14 of the Partnership Act.
For instance, in the case of HamJn V Houston & Co a partner in a firm bribed the agent of another firm for the purpose of obtaining useful information for the partnership. It was held that his co-partners were jointly and severally liable, since the obtaining of useful information was in the ordinary course of business.
The firm is generally liable for acts or omissions of a partner committed or omitted within the scope of his authority.
For the other partners to be held liable, it must be proved that:
- The partner was acting in the ordinary business of the firm
- The partner was acting in the usual way
- The partner was acting in his capacity as a partner
However, the other partners are not liable for acts of a partner if for example, he signs a deed without authority or where he acts in a personal capacity. A 3rd party who has dealt with a partner has two causes of action; He is entitled to sue the partner dealt with or all the partners. This is because the liabilities of the partners are unlimited and a partner is liable to lose private assets if the firm is insolvent. Suing a single partner disqualifies the 3rd party from suing other partners on the transactions. Suing all the partners enables the 3rd party to execute the court order against all the parties. (This is because the partners are jointly and severally liable)