CA Foundation Exam > CA Foundation Questions > A partner acts as ………&he...
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A partner acts as ……………for a firm.
- a)Agent
- b)Third Party
- c)Employee
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
A partner acts as ……………for a firm.a...
Implied authority of partner as agent of the firm
Subject to the provisions of section 22, the act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm. The authority of a partner to bind the firm conferred by this section is called his implied authority.
In the absence of any usage or custom of trade to the contrary, the implied authority of a partner does not empower him to-
- submit a dispute relating to the business of the firm to arbitration,
- open a banking account on behalf of the firm in his own name,
- compromise or relinquish any claim or portion of a claim by the firm,
- withdraw a suit or proceeding filed on behalf of the firm,
- admit any liability in a suit or proceeding against the firm,
- acquire immovable property on behalf of the firm,
- transfer immovable property belonging to the firm, or
- enter into partnership on behalf of the firm.
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A partner acts as ……………for a firm.a...
Introduction:
In a firm or business, a partner plays a crucial role in representing the firm's interests and acting on its behalf in various transactions. This answer will discuss why a partner acts as an agent for a firm and explain the concept of agency in detail.
Explanation:
1. Definition of an Agent:
An agent is a person who is authorized to act on behalf of another person or entity, known as the principal. The agent has the authority to make decisions, enter into contracts, and perform other legal acts on behalf of the principal.
2. Agency Relationship:
An agency relationship is formed when one person (the principal) grants authority to another person (the agent) to act on their behalf. The agent acts within the scope of their authority and represents the principal's interests.
3. Role of a Partner:
A partner is an individual who has entered into a partnership agreement with one or more persons to carry on a business for profit. Partnerships are a common form of business organization where two or more individuals share the management, profits, and liabilities of the business.
4. Partnership as an Agency Relationship:
A partnership is an example of an agency relationship. Each partner is considered an agent of the partnership and acts on its behalf. The authority of partners to bind the partnership is derived from their agency relationship.
5. Authority of a Partner:
As an agent, a partner has the authority to make decisions, enter into contracts, and perform other acts necessary for the partnership's business. The partner's actions are legally binding on the partnership, and the partnership is responsible for any obligations or liabilities arising from those actions.
6. Fiduciary Duties of a Partner:
Partners have fiduciary duties towards each other and the partnership. They must act in good faith, with loyalty, and in the best interests of the partnership. They should not engage in self-dealing or take actions that conflict with the partnership's interests.
Conclusion:
In conclusion, a partner acts as an agent for a firm because they have the authority to act on behalf of the partnership and bind it legally. The partnership is responsible for the actions of its partners, and partners have fiduciary duties towards each other and the partnership. This agency relationship is a fundamental aspect of partnership law and allows partners to effectively represent the firm's interests.
In a firm or business, a partner plays a crucial role in representing the firm's interests and acting on its behalf in various transactions. This answer will discuss why a partner acts as an agent for a firm and explain the concept of agency in detail.
Explanation:
1. Definition of an Agent:
An agent is a person who is authorized to act on behalf of another person or entity, known as the principal. The agent has the authority to make decisions, enter into contracts, and perform other legal acts on behalf of the principal.
2. Agency Relationship:
An agency relationship is formed when one person (the principal) grants authority to another person (the agent) to act on their behalf. The agent acts within the scope of their authority and represents the principal's interests.
3. Role of a Partner:
A partner is an individual who has entered into a partnership agreement with one or more persons to carry on a business for profit. Partnerships are a common form of business organization where two or more individuals share the management, profits, and liabilities of the business.
4. Partnership as an Agency Relationship:
A partnership is an example of an agency relationship. Each partner is considered an agent of the partnership and acts on its behalf. The authority of partners to bind the partnership is derived from their agency relationship.
5. Authority of a Partner:
As an agent, a partner has the authority to make decisions, enter into contracts, and perform other acts necessary for the partnership's business. The partner's actions are legally binding on the partnership, and the partnership is responsible for any obligations or liabilities arising from those actions.
6. Fiduciary Duties of a Partner:
Partners have fiduciary duties towards each other and the partnership. They must act in good faith, with loyalty, and in the best interests of the partnership. They should not engage in self-dealing or take actions that conflict with the partnership's interests.
Conclusion:
In conclusion, a partner acts as an agent for a firm because they have the authority to act on behalf of the partnership and bind it legally. The partnership is responsible for the actions of its partners, and partners have fiduciary duties towards each other and the partnership. This agency relationship is a fundamental aspect of partnership law and allows partners to effectively represent the firm's interests.
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